Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

LONDON TRANSPORT BILL

Lords amendments agreed to.

STANDING ORDERS (PRIVATE BUSINESS)

The Chairman of Ways and Means (Mr. George Thomas): I beg to move,
That the Amendment to Standing Orders relating to Private Business hereinafter stated in the Schedule be made:

SCHEDULE

Standing Orders, page 100, leave out Table VII (Fees to be taken by the Shorthand Writer).

The motion brings the scale of fees of the shorthand writers of the House into line with those of the Civil Service.

Mr. Wellbeloved: Can the Chairman of Ways and Means assure the House that the motion in no way reduces the fees paid by promoters of Private Bills? Many hon. Members believe that the promoters of private legislation do not pay sufficient in the way of fees, and we should like an assurance that the motion does not lessen their financial liability.

The Chairman of Ways and Means: I give that assurance.

Question put and agreed to.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Portugal

Mr. Peter Morrison: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will seek to pay an official visit to Portugal.

Mr. Teddy Taylor: asked the Secretary of State for Foreign and Commonwealth Affairs if he will now pay an official visit to Portugal.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan): I have no plans to do so at present. I paid an official visit to Portugal on 6th and 7th February and the Portuguese Foreign Minister was in London on 27th June for talks with my right hon. Friend the Prime Minister and me.

Mr. Morrison: Is the right hon. Gentleman aware that so long as the present Government continue in power in Portugal his decision not to pay an official visit will be welcomed? Are the NATO official documents still being supplied to Portugal? If so, at what stage will the right hon. Gentleman consider it right to advise his NATO colleagues not to supply Portugal with those documents?

Mr. Callaghan: The Portuguese régime—I do not think that there is a Government at present; the Portuguese have not yet been able to form one—has indicated that it retains its loyalty to NATO, and therefore it is being treated as a full member of NATO. We should not give up the battle for democracy there before we need to do so.

Mr. Newens: Does my right hon. Friend agree that in the present situation there is also a serious danger from the Right in Portugal, and that it ill becomes Opposition Members, who never uttered one word of protest about Caetano, and who wined and dined him, to protest about the absence of democracy in Portugal now? Will my right hon. Friend make it clear that we shall be utterly opposed to threats to democracy from the Right? Will he mention this to people who may have some influence on the activities of the CIA, bearing in mind what it has done in Chile and various other countries?

Mr. Callaghan: Although I agree with what my hon. Friend said about the attitude to Caetano, I do not agree with much of the rest of his supplementary question. The principal danger to Portugal at present comes from the attempt by certain elements in the armed forces movement, combined with the


Communist Party, to set aside the expressed will of the Portuguese people. Let us direct our attention to the real threat, rather than conjure up other threats which do not at present exist.

Mr. Biggs-Davison: As one who was reported by the PIDE for making adverse comments on aspects of the earlier régime, with the result that information was ordered to be withheld from me, may I ask the Foreign and Commonwealth Secretary whether he is aware that there are now many more political prisoners in Portugal—not accused of any offence, much less tried—and will he do his best to interest Amnesty International or some other suitable body in their cases?

Mr. Callaghan: Yes, Sir. What the hon. Gentleman says is correct, and it is a cause of considerable disquiet. Representations on the matter have been made by our ambassador, and we shall continue to make them when we think that it will be helpful.

Mr. Litterick: If my right hon. Friend makes an official visit to Portugal, how will he explain to the Portuguese authorities the meaning of recent statements that all aid grants, and so on, to be made to Portugal, or contemplated, would be conditional on the establishment of democracy? How will he explain the apparent inconsistency that we already grant economic aid to nations which do not have democratic Governments or régimes?

Mr. Callaghan: The European Council considered this matter, and the decision was taken by all the Heads of Government. We were considering our attitude to aid to Portugal in the European context. I know of no dictatorship in Europe to which financial aid of this sort is given. The statement that was made, which I wholeheartedly endorse, and which I hope my hon. Friend whole-heartedly endorses, was that in accordance with our European policy and history to date we could support only a pluralistic democracy.

Mr. Eldon Griffiths: Yesterday in the House the Prime Minister acknowledged that funds were going to the Portuguese Communist Party from the Communist Party of the Soviet Union. He drew a distinction between those funds coming from the Communist Party of the Soviet

Union and the Communist Government of the Soviet Union. Will the Secretary of State define that distinction a little more closely?

Mr. Callaghan: No, Sir. I do not think that I can elaborate on a reply to a supplementary question which was asked yesterday.

BBC External Services

Mr. Churchill: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make it a condition of his Department's grant to the external services of the BBC that they cease to employ avowed members of Communist or Communist-front parties.

Mr. James Callaghan: No, Sir. But I have asked the BBC to take effective measures against repetition of the events which I believe the hon. Member has in mind, whether in the Portuguese service or any of the other external programmes. It has agreed to do so.

Mr. Churchill: I thank the right hon. Gentleman for that reply and for the firm line he has taken on this matter. I welcome the forthright admission by the BBC of incidents of pro-Communist bias in its Portuguese services. Is the right hon. Gentleman aware that at a time when the democratic parties in Portugal are fighting for their lives against the Communist Party—which is reliably reported to be receiving the equivalent of £4 million sterling per month from the Soviet Union—the British people find it difficult to understand or to accept that the external services of the BBC should employ people who represent the enemies of democracy in what is supposed to be the voice of Britain abroad?

Mr. Callaghan: The BBC has acknowledged lapses from the accepted standards of objectivity in its Portuguese services. In the light of the review which was conducted, I have the personal assurance from the Director General of the BBC that the persons concerned have been reprimanded and warned that the penalty for any repetition will be dismissal. In view of the supervision of the programme by the Director General, which is taking place, he is satisfied that there will be no recurrence. Therefore, I do not consider that I should take the matter any further.

Mr. Whitehead: Is my right hon. Friend aware that the prompt response of the BBC to the representations made—some would say that it was super-prompt—should be the end of the matter? It would be greatly regretted by many of us, who are equally concerned with the establishment of pluralist democracy in Portugal, if we encouraged the BBC to launch a McCarthy-ite purge of all the BBC external services.

Mr. Callaghan: I do not think that there is the slightest danger of that. My rôle with the external services is to prescribe the countries, languages and times of transmissions. I do not think that I need to carry that matter any further now.

Mr. Maudling: Is the Foreign Secretary aware of the enormous importance of the external services of the BBC, partly by reason of their high quality in general and partly because they are regarded universally outside this country as the voice of Britain? In those circumstances, should not the people working in those services accept the same responsibilities and the same conditions as people working in the Foreign Service?

Mr. Callaghan: I do not know that I want to give an answer to a question like that off the cuff. At first glance I think that the responsibilities of the people working for the BBC external services are a little less than those of the people employed in the Foreign Service. Certainly high standards of objectivity are required, and are accepted as being required, by the BBC authorities.

Mr. Dalyell: As one who, in the House, has gently criticised the BBC external services for alleged bias against British trade, and who subsequently has had discussions with the BBC, may I say that I am persuaded that the BBC coverage of British trade is fairer than some of us thought?

Mr. Callaghan: I am glad to hear my hon. Friend say that. Most of us who go abroad are conscious of the influence of the BBC external services. I am glad to hear my hon. Friend's tribute to the work done overseas by the BBC. In my judgment his tribute is well deserved.

Mr. Blaker: asked the Secretary of State for Foreign and Commonwealth

Affairs if he will consult with the BBC regarding the desirability of extending the duration of broadcasts in the Portuguese Service.

Mr. James Callaghan: Yes, Sir. I have already been in touch with the BBC External Services on this important matter. They are actively considering how an extension can be introduced in the near future.

Mr. Blaker: That answer is welcome, but is the right hon. Gentleman aware that it makes it all the more important that the contents of the programmes and those running the programmes should be objective? Is the right hon. Gentleman aware that some hon. Members will have been rather disappointed that he was not able to go a little further in answering a previous question on this subject? Should another situation arise in some other part of the world where it appears suitable to increase the duration of the broadcasting of the BBC's overseas services, does the right hon. Gentleman consider that it could be done more rapidly than in this case?

Mr. Callaghan: The BBC's External Services' Budget is subject to the overall cut for 1976–77 that was announced in the Spring Budget. It would be able to ask the BBC to increase its services to Portugal only by cutting down services elsewhere. This is a problem that the House must face when hon. Members call for reductions in public expenditure. I regret this situation, but it is inevitable, as I shall not be able to get a larger Vote. Mr. Mario Soares told me and all the Socialist leaders on Saturday that the people of Portugal—he was probably generalising—listen exclusively to the BBC and the German radio. It is therefore, of vital importance to Portugal's struggle for democracy that we should extend the services and that they should carry accurate and objective news.

Mr. Dalyell: Is my right hon. Friend aware that some of us are a little uncomfortable about certain pressures that seem to be coming from the Opposition about the BBC? I hope that these pressures will be resisted.

Mr. Callaghan: My hon. Friend knows me well enough to know that I shall yield to pressure from the Opposition not because it comes from them, but only if it


is realistic. I shall judge the matter as objectively as I can. There were isolated lapses in the BBC's Portuguese service. I am satisfied that they have been put right. I do not know whether the hon. Member for Blackpool, South (Mr. Blaker) wishes to pursue a vendetta on the matter. I am satisfied that the Director-General wishes to pursue an objective policy and that he is making arrangements to do so. I think that we should leave the matter there.

Iceland (Fishery Limits)

Mr. Beith: asked the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Government of Iceland about the unilateral extension of that country's fishing limits.

Mr. Henderson: asked the Secretary of State for Foreign and Commonwealth Affairs if he will seek a meeting with the Icelandic Minister of Foreign Affairs.

Mr. Wall: asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he is having with the Icelandic Government over the future extension of fishing limits.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): My right hon. Friend has no immediate plans to meet the Icelandic Foreign Minister, but as my right hon. Friend the Minister of State told the House on 21st July, we have been pressing the Icelandic Government for an early opening of negotiations on a renewed agreement on British fishing around Iceland. My right hon. Friend saw the Icelandic Prime Minister, Mr. Hallgrims-son, in Helsinki on 30th July, and took the opportunity to repeat to him that in our view it was very important that these negotiations should be started in good time.

Mr. Beith: Does not the emphasis placed on negotiations indicate that, however much we may disapprove of unilateral declarations of this kind, the British Government recognise that 200 miles is an appropriate area of sea to be regulated for fishing and other purposes by a coastal State? Is it not time that Britain made it clear that if the international agreement does not enable us to safeguard oar own waters—by a

similar 200 mile radius or by a median line, where appropriate—we would not want to sit back and see other countries making such declarations while our own fish resources were threatened?

Mr. Hattersley: There is no question of the Government's sitting back whilst our fishery resources and prospects are threatened. Equally, there is no question of the Government's making a unilateral declaration about a 200-mile limit, which in our view would be illegal and inappropriate to Britain's international posture over the years. I assure the hon. Gentleman that we recognise—as I believe that the Icelandic Government recognise—that we have a special interest in this matter and a special necessity to fish close to Icelandic coastal waters. I promise that we shall continue to press those interests very hard.

Mr. Henderson: Is the Minister aware that the Icelandic Minister for Foreign Affairs said that the fish stocks in the Iceland area could not longer sustain the effects resulting from fishing by foreign nationals? Does he accept that the herring resources off the west coast of Britain can no longer sustain fishing by foreign nationals? In his discussions with Iceland, will he attempt to secure an end of Iceland's right to fish for herring off the west coast?

Mr. Hattersley: The essential aspect of these negotiations is securing British rights to fish in, about and close to the Icelandic waters. The hon. Gentleman referred to what a Minister in the Icelandic Government said. That is an example of the substantial passions which have been raised in Iceland about this issue. Our job is to demonstrate over the next two months that substantial passions are also raised in Great Britain over the issue, and that we are determined that a solution fair to British fishermen should be obtained.

Mr. Wall: It is clear that traditional British fishing rights will be maintained until altered by international agreement. Is not the best answer for all nations who are allowed to do so by international law to extend the limit to 200 miles?

Mr. Hattersley: I am not sure that that is the answer to our immediate problems, which we seek to solve by direct negotiations with the Icelandic Government by


13th November. I assure the hon. Gentle-man that in the time at our disposal we shall continue to negotiate as toughly and as determinedly as we can, reminding the Government of Iceland that they have a vested interest in obtaining a satisfactory agreement, as have the British Government.

Mr. Luard: Is it not better to seek to separate, as far as we can, the general right of coastal States to make claims to 200-mile fishing zones—that is a right which seems likely to be claimed by a number of other countries in future—and our own specific rights in these waters? Is it not a fact that our rights should be covered by the original 1962 fishing agreement with Iceland and the subsequent arrangements made with that country? That should mean that regardless of a general zone of 200 miles we should make special arrangements for British fishing fleets.

Mr. Hattersley: I am sure that that is right. The Minister of State made clear on behalf of the Government at the Law of the Sea Conference that the 200-mile zone seems to us to be the basis on which agreement, both internationally and multi-laterally, will eventually be obtained. The discussions to which I refer today deal specifically with the bilateral fishing arrangements between two States. In those discussions we must persist with our determination in fishing much closer to Icelandic shores than 200 miles or, indeed, 50 miles.

Mozambique

Mr. Rifkind: asked the Secretary of State for Foreign and Commonwealth Affairs what requests for financial help the Government have received from the Government of Mozambique.

The Minister of State for Foreign and Commonwealth Affairs (Mr. David Ennals): As my right hon. Friend the Minister for Overseas Development explained on 9th July, preliminary discussions about aid were held with Frelimo before independence. Further discussions can take place as soon as the Mozambique Government are ready.

Mr. Rifkind: Is the Minister aware of the reply which was given to me by the Secretary of State for Foreign Affairs on 11th June when he stated that specific

proposals had been made to the Government of Mozambique but that he was not in a position to say what the proposals were for helping that Government to join the sanctions campaign against Rhodesia? Will the Minister say what those proposals were? Will he give the House an assurance that the United Kingdom will not commit itself to paying large sums of money to Mozambique unless there is an international agreement whereby any burden is shared by the United Nations member countries and others?

Mr. Ennals: No. I cannot go beyond what my right hon. Friend said. He was right in pointing out that before independence certain specific proposals had been discussed with the leaders of Frelimo. They know the ideas we have in mind. We are ready to hold discussions with them as soon as they wish, now that an independent Government has been formed in Mozambique. In the meantime those discussions, and such proposals as have been made, are obviously confidential.

Mr. Ioan Evans: Will my right hon. Friend consider giving financial aid to Mozambique, as the Fascist régime in Portugal has ended and Mozambique is moving towards independence and is likely to maintain United Nations sanctions against Rhodesia? Does my right hon. Friend agree that as we shall no longer have to operate the Beira control the money we shall save in that respect should be given to Mozambique to ensure that the illegal régime in Rhodesia is brought to an end at the earliest possible date?

Mr. Ennals: There is no doubt that Mozambique will require a great deal of assistance in developing her economy. We recognise that the application of sanctions will impose a severe burden on Mozambique's economy. That is why we are prepared to contribute generously, in the hope that other United Nations member States will do likewise, preferably within the United Nations framework.

Mr. Maudling: Why cannot the Minister give the assurance for which my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) asked—that any aid from the United Kingdom that is related to United Nations sanctions will be within the United Nations context?

Mr. Ennals: I said that it is our hope that it will be within a United Nations framework, but, as I have said before in answer to the right hon. Gentleman, in deciding the level of United Kingdom aid to a country, we have to determine the level of need of that country. Part of the level of need will be the extent to which Mozambique applies sanctions against Rhodesia, as it is part of her international obligation to do.

Disarmament Talks

Mr. Frank Allaun: asked the Secretary of State for Foreign and Common-wealth Affairs if he will make a statement on the most recent developments in the CSCE and the mutual and balanced force reduction talks.

Mr. Robin F. Cook: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of the mutual force reduction talks.

Mr. James Callaghan: As regards the Conference on Security and Co-operation in Europe, I would refer my hon. Friend to the statement which was made by my right hon. Friend the Prime Minister yesterday.
The MBFR negotiations were adjourned for the summer recess on 17th July. I would refer my hon. Friend the Member for Salford, East (Mr. Allaun) to the answer he received from my right hon. Friend the Minister of State on 16th July.

Mr. Allaun: Did not the leaders of both sides at Helsinki state that the top priority now was mutual force reductions? What will the Foreign Secretary and Her Majesty's Government do to seize quickly this opportunity for mankind to beat its swords into ploughshares and relieve the world of its colossal burden of arms spending?

Mr. Callaghan: My right hon. Friend is right. That was the burden of a great many speeches at Helsinki. In my view, as I said in my visits to Poland and Hungary and, earlier, to Moscow, this is the task for 1976. We should all be concentrating on carrying the Vienna talks further—if possible to a conclusion. My hon. Friend asks us to do it quickly. That would be unrealistic. The difficulties in the positions of both sides will demand a

long period of careful negotiation before either gives up any positions that it holds.

Mr. Blaker: Is the Foreign Secretary aware that the House will endorse the remarks made by the Prime Minister yesterday, to the effect that the test of the security conference will be not the undertakings that were given at Helsinki but whether they are carried out? Is it not salutary to recall that the constitution of the Soviet Union guarantees the citizens of the Soviet Union freedom of speech, freedom of the Press and freedom of assembly, and guarantees the constituent republics of the Soviet Union freedom to secede?

Mr. Callaghan: Yes, Sir, but I think that he would be singularly naive who expected all that to be introduced tomorrow.

Mr. Fell: Or even on Sunday.

Mr. Callaghan: I agree with that, bearing in mind the long history of Russia both under the Soviet régime and previously. Therefore, one has to have regard to the historical position. On the other hand, having attended this conference and having been present at all the previous talks, I think that it would be unduly cynical to dismiss the Helsinki agreements as being of no value. They have all been reproduced in all the news-papers—official and otherwise—of the Soviet Union and Eastern Europe. People have been told to what their Governments have given assent and to what they have pledged their names. We should not underrate the impact of opinion in these countries and elsewhere. But Mr. Brezhnev and others will continue to argue, as they did at Helsinki—I repeat his words:
No one should try to dictate to other peoples, on the basis of foreign policy considerations, the manner in which they ought to manage their internal affairs. It is only the people of each given State and no one else who have a sovereign right to resolve its internal affairs and establish its own laws.
That will be the basis of the argument during the next two years. I beg hon. Members not to write off the impact of what is happening in Eastern Europe as a result of these two years of hard negotiations.

Mr. Cook: Does my right hon. Friend accept that the Helsinki agreements will ring hollow if they do not eventually lead


to an arms reduction in Europe? What is the current status of tactical nuclear weapons in the Vienna discussions? As the West has marked superiority in these weapons, could not we afford to be a little less coy in including them in negotiations? If we continue to exclude them from the Vienna talks and from the SALT talks, when shall we get round to talking about the control of one of the most destructive weapons in central Europe?

Mr. Callaghan: I agree that these talks are important, and I do not think that it is impossible to construct a package that would be advantageous to both sides, although it would be difficult to do so. Despite the desire of the Soviet Union and others that we should include nuclear weapons, the Western side has so far confined itself to the question of ground troops—in which, according to our data, we are heavily outnumbered—and tanks—in which the Soviet Union outnumbers us by about two and half to one. We should not take up a final or fixed position on what should be included in the package if one can be constructed that satisfies both sides.

Mr. Sproat: I welcome what was decided at Helsinki, but will the right hon. Gentleman tell us whether, in his opinion, the quotation he read of what Mr. Brezhnev said, in effect, outlaws the Brezhnev doctrine? As to the follow-up, while we all welcome the stocktaking in Belgrade in two years' time, what interim arrangements will there be for meetings, possibly between Foreign Ministers, specifically to discuss the Helsinki agreements? I am speaking not just of general talks but, for example, of discussions before the two years are up on how to monitor Soviet interference in Portugal by giving £1 million a week aid to the Portuguese Communist Party.

Mr. Callaghan: I must leave Mr. Brezhnev to interpret his declaration. [Interruption.] I intend to leave him to interpret it. There is nothing in the Helsinki documents to give any countenance to the Brezhnev doctrine. Nothing has been signed there that will give any support to that so-called doctrine.
As to meetings that might take place before 1977, I propose to continue the series of visits to Foreign Ministers of the Eastern European countries that I have

already undertaken, and to receive visits from them. The Prime Minister will also be going to Romania in September. That will enable us to discuss progress in these matters, which I regard as being of great importance. Indeed, I think that the follow-up is as important to us as it is to anyone else.
As to Portugal, although we always pick our priorities and say that one matter or another is of priority, the attitude to Portugal of the signatories to the Helsinki agreements is an important test case and I hope that that has been made clear to those concerned.

Sinai Peninsula

Mr. Knox: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will institute discussions with a view to the acquisition by the United Nations by purchase, by long lease or otherwise, of the Sinai Peninsula as a buffer zone and first world district.

Mr. Ennals: No, Sir. There is no prospect that the Egyptian Government would agree to such a proposal.

Mr. Knox: The right hon. Gentleman's answer is rather disappointing. Is he aware that about 70 hon. Members in 1965, 1967 and 1973 gave support to this proposal? Will he reconsider his answer?

Mr. Ennals: The matter was considered at that time. Certainly I considered the matter when the hon. Gentle-man and some of his colleagues put forward this idea only a few months ago—in fact, some time last year. Although it could conceivably be of interest as part of an overall long-term settlement of the Arab-Israeli dispute, I think that at the moment it is premature. I am not saying that it is not an idea that we shall be examining at a later date.

Mr. Faulds: Would it not be more advisable, and would it not save a good deal of trouble in future, if the whole of the area that used to be Palestine and is now called Israel were to become the United Nation's first world district, instead of it existing, as now, as one of the world's leading racialist States?

Mr. Ennals: I hardly think that that proposal is likely to find international agreement, either.

Cyprus

Mr. Hard: asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a further statement on the part being played by Her Majesty's Government in working for a settlement of the Cyprus question.

Mr. James Callaghan: My right hon. Friend the Prime Minister and I had useful bilateral discussions with Mr. Karamanlis, Mr. Demirel and Mr. Christophides in Helsinki last week. The good offices of the Nine have been made available through the Italian Presidency to help the parties in their search for a lasting settlement in order to supplement the efforts of Dr. Waldheim, the Secretary General, at the United Nations.

Mr. Hurd: Will the right hon. Gentle-man say a little more about what he hopes Signor Moro, acting on behalf of the Community, will be able to achieve in this matter? Are we right in deducing from what he has been saying on these matters that he sees more hope in this kind of diplomacy, and in the talks in Vienna, than in the House's condemnations of Turkey, or in an arms embargo against Turkey?

Mr. Callaghan: The discussions between Mr. Denktash and Mr. Clerides, according to the reports I have been receiving, have been more hopeful than for some time past. Although I have said constantly in the House that there are hopes of the talks succeeding and that I trust they will succeed, I think I can say that with a little more confidence today.
As regards Signor Moro's work, I have not had a conversation with him since he began his talks. I understand that he was going to probe to see how far he could carry any offer of mediation. It was a very preliminary discussion. As regards condemnation, I do not think that an arms embargo on Turkey will make that country any more flexible; rather the reverse. However, we must all acknowledge that at the moment Turkey has not carried out the United Nations resolution. That must be made clear. Although we do not go round whipping Turkey all the time, we must try to get a settlement that will ensure that Turkey can be brought into conformity with the United Nations.

Mr. Atkinson: Does my right hon. Friend recollect that some time ago in the House he suggested that many British workers' livelihoods would be at stake if we were to prevent the shipment of British arms to Turkey? Even though that embargo can be placed on Turkey pending compliance by Turkey with the United Nations resolution, is not my right hon. Friend getting his priorities wrong in terms of the answer which he has just given? Despite the effect that it might have on our economy, would we not be doing a good deal towards world morality if we were able to tell Turkey that we would not supply arms so long as those arms could be used for the purpose of defeating the United Nations resolution?

Mr. Callaghan: My hon. Friend is get-ting the time scales wrong. At present, no arms of any consequence are being supplied to Turkey, and I have never said there are. What we are discussing is whether there should be talks between British firms and the Turks to see whether, in future, there will be orders coming to this country that might result in work that will take place in two years' time in the fulfilment of orders in three years' time. That is what we are talking about. We are not talking about any immediate consequence. For us to say now that we shall place an arms embargo on Turkey would be an almost completely meaningless gesture.

Sir John Rodgers: The whole House will welcome the fact that the talks between Mr. Denktash and Mr. Clerides have made progress and look as if they could make even more progress, but will the right hon. Gentleman hazard a guess whether Archbishop Makarios's rôle in the negotiations has been a help or a hindrance?

Mr. Callaghan: No. I think it would be mischievous for me to express an opinion on that.

Hong Kong

Mr. Costain: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of the new Consumer Council in Hong Kong.

Mr. Ennals: The council has considered almost 7,000 individual complaints and taken successful action in


nearly 600. In about 1,200 cases the retailers' explanations were considered satisfactory; and action in the rest proved impossible.

Mr. Costain: Does the right hon. Gentleman not think that the House should congratulate Hong Kong on the way it has got this going so quickly? Are there not some examples that we might emulate in this country?

Mr. Ennals: I am not going to comment on whether an experiment in Hong Kong would be applicable in this country. However, I think that the hon. Gentleman is quite right in suggesting that the experiment in Hong Kong has been most encouraging. I congratulate those responsible in Hong Kong on the initiative that they took.

Middle East

Mr. Luce: asked the Secretary of State for Foreign and Commonwealth Affairs whether he plans any discussions with the United States Government on the Middle East.

Mr. James Callaghan: Such discussions are continuing, and the most recent were in Helsinki last Thursday, 31st July.

Mr. Luce: In view of the key rôle which the United Nations plays in the Middle East, has the right hon. Gentle-man impressed upon Dr. Kissinger the need to urge both the Israelis and the Arabs to make substantial concessions in the next few weeks if a further war is to be averted? Does the right hon. Gentle man agree that it is Her Majesty's Government's policy to oppose anyone who urges that Israel should be expelled from the United Nations? Equally, does he agree that we should expect Israel to desist from her provocative policy of building settlements in occupied territory?

Mr. Callaghan: As regards forth-coming events, both President Ford and Dr. Kissinger are deeply concerned that there should be a speedy conclusion of the current round of talks, leading to an interim agreement in August. There is hardly any need for me to press that upon them. They are perhaps even more aware than I am of the consequences of the situation.
I have made it utterly clear—I repeat this—that I am not going to ask the

British Government's representative at the United Nations to support a motion to expel or to suspend Israel. If such a motion were carried, the consequences would have a serious effect on the United Nations. I have argued in much more unpopular cases than this that the universality of the United Nations is an important principle for us all to observe. I have no direct knowledge of the settlements to which the hon. Gentleman refers, but if he cares to table a Question about the matter, I shall answer it

Mr. Hooley: Is my right hon. Friend aware that I am staggered to hear him say that he has no knowledge of the colonisation of Egyptian and Syrian territory by Israel? This has been going on for many years and has not been concealed by the Israelis. It is a major stumbling block to any prospects of a peaceful settlement. Will he interest himself further in this matter and draw the attention of the United States and Israeli Governments to this important issue?

Mr. Callaghan: I note what my hon. Friend says, but I feel that there is probably another side to the case.

Oral Answers to Questions — EUROPEAN COMMUNITY

Middle East

Mr. Tim Renton: asked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with EEC Ministers regarding the Middle East situation.

Mr. James Callaghan: I would refer the hon. Gentleman to the reply that my right hon. Friend the Minister of State gave to a similar Question by my hon. Friend the Member for Brighouse and Spenborough (Mr. Jackson) on 30th July.—[Vol. 896, c. 493.]

Mr. Renton: Does not the right hon. Gentleman agree that one of the steps that should be taken by Israel is for her to withdraw to the east of the Sinai passes? Is the Foreign Secretary aware of the remarks attributed to King Hussein yesterday, to the effect that another Middle Eastern war was inevitable unless urgent steps were taken? Does he see any chance of the EEC countries working out together what those urgent steps should be?

Mr. Callaghan: The degree of withdrawal by Israel is one of the delicate matters now being negotiated between the parties, with the intermediation of the United States. I do not think that it would be helpful for me to express an opinion on what should be the position of the United States at the end of the negotiations. As for the prospect of another war, I believe that the prospect of failure to reach an interim agreement in August could have a shattering impact on the Middle East.
On the subject of EEC involvement, we constantly discuss the question whether the EEC Foreign Ministers should take an initiative, and we keep in close contact with the United States, as well as with Israel, Egypt and other confrontation States on this matter. So far, our joint opinion is that it would not be fruitful for the EEC itself to take a political initiative.

Mr. R. C. Mitchell: Is my right hon. Friend aware that there is at present a strong Israeli-inspired campaign to sabotage the Euro-Arab dialogue, and that a recent resolution at the European Parliament, which we managed to water down considerably, was part of that campaign?

Mr. Callaghan: The Community recently reached an agreement with Israel, and the Euro-Arab dialogue in some ways is a counterpart to that. The talks had a successful beginning on 22nd and 24th July, but it is not our intention—I hope that it is nobody else's—that the dialogue should be used to debate issues in the Arab-Israeli conflict. The purpose of the dialogue is economic, although its very existence is an important political fact.

Mr. Churchill: Even if a settlement is achieved, as we hope it will be in the coming weeks or months, the whole of the efforts of the British Government and of other interested parties could be brought to naught by the sheer weight and volume of military hardware which has been flowing and continues to flow into this potential area of conflict. Is the right hon. Gentleman aware that the ratio of arms into the area has exceeded two-to-one from the Soviet Union to the Arab neighbours of the Israelis, compared with anything coming from the United States in recent months?

Mr. Callaghan: There is a very great flow of arms into the Middle East. That is one of the most disquieting features of the situation; indeed, I have discussed that matter with my colleagues and with others. If I thought that there was a chance of obtaining agreement on the subject I should jump at it, irrespective of the consequences to work here, or anything else. However, it would involve the Soviet Union as well as the United States. I think that the parties in the Middle East themselves are not yet clear whether they would support it. Therefore, I fear that there is no prospect of such a move at present, but it is a matter at which we must constantly work if we see the faintest chance of success.

Mrs. Miller: Is my right hon. Friend aware that hopes of peace in the Middle East are sadly jeopardised by the behaviour of the Arab States in the Third World grouping at the United Nations, particularly in the organisations which until the present time have not been the subject of political dispute? Will he take steps to ensure that, so far as the matter lies within the power of the British Government, the politicising of the United Nations agencies, which until now have carried out wonderful universalist work, will not be allowed to continue?

Mr. Callaghan: I entirely agree with my hon. Friend. I would not have been able to express the matter as well as she has done. Where we control the voting in these institutions it is my standing practice to prevent the politicising of those bodies, but, alas, we are not always free to do so because often nongovernmental representatives attend.

Council of Ministers

Mr. Canavan: asked the Secretary of State for Foreign and Commonwealth Affairs when next he expects to attend the EEC Council of Ministers.

Mr. James Callaghan: On 15th and 16th September.

Mr. Canavan: What immediate steps will my right hon. Friend take to persuade other Common Market members to extend the terms of the Lomé Convention to include other non-associate countries, particularly members of the Commonwealth?

Mr. Callaghan: This is an important matter, which is the subject of discussions. The first step which we shall be able to take will be at the Special Assembly of the United Nations, which is to be held on 2nd September. The Community has reached an agreed position on those and other matters. I do not think there will be a settlement there, but we shall certainly follow up the matter over a period of months. We shall not be the principal paymasters. The largest sum in aid of this scheme will probably come from the Federal Republic of Germany. Therefore, the Germans will naturally have an important say in these issues.

Mr. Dykes: At the next meeting in September, will the right hon. Gentleman be able to say that he feels that it will be some time before Greece becomes a full member of the EEC, and does he agree that there is a substantial difference between the Government's position in welcoming Greece's application and implementing it, since this involves difficult negotiations about a country with a basically weak economy?

Mr. Callaghan: It is too early for me to reach conclusions on that matter. The Commission was asked by us at its last meeting to prepare a report on the issues involved. I understand that the Commission will be some months in preparing that document. When that work has been completed, we shall be able to consider the basic problem of how soon Greece will be able to join.

Mr. David Steel: Will the right hon. Gentleman consider with the other members of the Council of Ministers the question of having Scottish representation in Brussels? On commonsense grounds, does he not agree that the Scottish Office should now open a liaison office in Brussels, so that we may take direct advantage of the various European funds available there?

Mr. Callaghan: I understand that my right hon. Friend the Lord President of the Council made clear in the debate on the summer Adjournment motion that the White Paper on devolution will deal fully with the question of representation in the EEC, following the establishment of the Scottish Assembly and similar matters. I wish to put on record that the rôle of United Kingdom Ministers is to represent the United Kingdom. There-

fore, I regard it as my rôle to represent Scotland, Wales and the rest of the United Kingdom.

Mr. Henderson: Does the Foreign Secretary accept that he might represent the United Kingdom more effectively if he were properly advised by the Scottish Office about the Scottish case?

Mr. Callaghan: It is not for me to disclose the secrets of the Cabinet, which are kept tightly—[Interruption.]—but I should not like the hon. Gentleman to be under any misapprehension that the Secretary of State for Scotland never speaks to me about this question, or that there is not a telephone, or that he is unable to write to me about the matter, or, indeed, that we do not have committees considering these problems. It is an absurd idea that I go to Brussels without having full knowledge of what the Secretary of State for Wales or the Secretary of State for Scotland has to say. Even if we do not cover them in correspondence, we certainly have discussions on these matters.

Mr. Dalyell: Changing the subject to a more fruitful topic, will the Foreign Secretary discuss with his colleague the disadvantages that accrue to democracy of having a peripatetic European Parliament? Does he know that it costs £1 million a year to shift all the paper from Strasbourg to Luxembourg to Brussels and back to Luxembourg, apart from the valuable time of busy officials? Will he raise this matter in relation to the need for a permanent seat for the European Parliament near the centre of power?

Mr. Callaghan: There have been some preliminary skirmishes or talks in what are called the couloirs, but I do not think there is any agreement, yet as to the prospect of a permanent home for the European Assembly.

Mr. Skinner: asked the Secretary of State for Foreign and Commonwealth Affairs what recent consultations he has had with EEC Ministers; and if he will make a statement.

Mr. James Callaghan: My right hon. Friend the Prime Minister and I attended the Community Heads of Government meeting on 16th and 17th July and visited Hamburg for a meeting with


the German Chancellor on 24th July. We also had discussions with a number of Heads of Government and Foreign Ministers of EEC countries at the Conference on European Security and Co-operation in Helsinki last week.

Mr. Skinner: Does my right hon. Friend accept that those of us—perhaps a small and dwindling band—who feel that the Common Market, or certainly the Treaty of Rome, contains the seeds of its own destruction, believe also that a gallop towards political union would be doubly disastrous for this country? As one who expressed concern before the referendum, during it, and perhaps even after it, will my right hon. Friend say once again that he, too, is concerned about any drift or gallop towards federalism, and that he will put it in the appropriate locker, draped appropriately, perhaps, with the Union Jack, at any time that he finds it necessary when he meets his colleagues in Europe?

Mr. Callaghan: There has not been a recent discussion on this issue. On the whole, the old nag tends to hobble along rather than gallop. That is my experience, in whatever field it moves. We shall now have to wait and see the report that Mr. Tindemans will prepare and bring in at the end of the year or thereabouts. Then I think there will be a series of discussions. It is bound to be a long drawn out matter, in which the House of Commons and many other bodies will want to express their opinion. Even after that I think that the gap between discussion and action would be very substantial.

Mr. Rifkind: Does the Secretary of State agree that those who, like the hon. Member for Bolsover (Mr. Skinner), have often argued that the European Commission is essentially an undemocratic organisation, should realise that the best way to deal with this is to make the European Parliament more effective by means of direct elections, and so on?

Mr. Callaghan: The powers of the European Assembly are frequently considered by the Council of Ministers, but I do not think that at present there is any need to extend them.

Mr. Spearing: As the Foreign Secretary has mentioned the Tindemans Report, will he confirm that this is to

the Heads of Government and not to the formal Council? Will he also help the House in distinguishing the political functions as between the Heads of Government meeting and the Council? Surely only the latter comes within the ambit of the Treaty of Rome, and the Heads of Government meetings are extra to the Treaty and therefore not within the constitution of the EEC.

Mr. Callaghan: This is tempting ground. The Heads of Government, when they meet now, call themselves the European Council. The Foreign Ministers, when they meet, call themselves the Council of Foreign Ministers, and the organ referred to in the treaty is the Council of Ministers, but I do not think that the semantic differences between the two are likely to affect the attitude of the Council of Foreign Ministers if their Heads of Government take a certain view, because some Foreign Ministers might find that they would not be occupying their posts very long if they did.

Mr. John Davies: In view of the Foreign Secretary's flexible approach to these matters, will he assure the House that the Tindemans Report, and any other such reports which come before the Council of Ministers, will be made available to be seen by this House and debated in one form or another?

Mr. Callaghan: It is absolutely imperative that that should be so. The Council of Foreign Ministers will need to discuss this, but of course it will need to have the fullest debate in all areas of public opinion, including Wales and Scotland, and in the trade unions and other organisations, like the CBI. I think that many people should have a voice in how we see the future of Europe developing before final decisions are taken.

Mr. Wrigglesworth: Does my right hon. Friend accept that, although some Labour Members do not necessarily want to gallop towards union, we would not mind a delicate canter? With that in mind, when the consultations on the Tindemans Report have been completed, will he be prepared to consider the production of a Green Paper, so that we can have public discussion on this matter—discussion which has been lacking in any sort of detail since the referendum campaign?

Mr. Callaghan: It is a little early to say that, but if my hon. Friend will put a Question down later, I shall give consideration to it.

Mr. Eldon Griffiths: In view of the enthusiastic approach that the right hon. Gentleman and his colleagues have rightly expressed towards a common European foreign policy and other policies, will he say to what extent all members of the Community were consulted before it was decided to have an economic summit on unemployment and other matters this autumn, and what arrangements are to be made to ensure that the Community as a whole is represented there?

Mr. Callaghan: The Heads of Government who attended a lunch given by the Prime Minister had a fruitful discussion on a wide range of issues, including the general economic situation, which we were unable to complete owing to the timetable for the CSCE meetings. They will remain in contact in order to follow up some points touched on in discussion. No decision has been taken on whether this will lead to further talk at Heads of Government level.

Namibia

Mr. Hooley: asked the Secretary of State for Foreign and Commonwealth Affairs what recent conversations have been held between Foreign Ministers of the EEC with a view to concerting a common policy on the problem of Namibia.

Mr. Hattersley: Namibia is regularly discussed at various levels of the political co-operation machinery. Foreign Ministers are kept fully informed of these discussions; they have not so far discussed Namibia collectively.

Mr. Hooley: Is my right hon. Friend aware that the recent diplomatic pressure brought to bear on South Africa jointly by the United States, France and the United Kingdom was a valuable move, and does he agree that if this could take the form of pressure from the United States and all nine members of the EEC it would be even more valuable? Does he also agree that it would be disastrous if the Western Powers again, at the next General Assembly, found themselves in an isolated group in the world community on the issue of Namibia?

Mr. Hattersley: I am glad that my hon. Friend thinks that some progress has been made as a result of the decision by the Governments of France, the United States and the United Kingdom. I agree with him and hope that may continue to be so. Certainly we shall continue to examine whether that sort of pressure can be extended to cover all members of the EEC, and if it seems appropriate we shall raise it under the political machinery at the meeting in September, in the hope that we can, in a co-ordinated way, pursue the kind of policy that my hon. Friend and I want to see achieved.

Mr. Tugendhat: Does not the Minister of State agree that there are a number of difficult questions relating to South Africa, of which Namibia is one, the recognition or otherwise of the Bantustans another, and arms sales a third? Does he further agree that it would be highly desirable for the members of the European Economic Community to work out a common position on these issues?

Mr. Hattersley: I agree with that, in particular in regard to the subject the hon. Gentleman raised. Many of us think that one of the important objectives of the EEC in the rest of this decade is to work out common foreign policy initiatives over a whole range of subjects. This is an example of the success that could come from that policy, and I hope it can become wider and more extensive as the decade continues.

Political Union

Mr. William Hamilton: asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his latest talks with EEC Foreign Ministers concerning progress towards European political union.

Mr. Hattersley: There has been no recent discussion of this subject in the Council of Ministers. I do not expect it to be raised until Mr. Tindemans has produced his report.

Mr. Hamilton: Will my hon. Friend reaffirm that it is the Government's official view that they agree in principle that political union is desirable, however long term that aim might be? In the meantime, does he accept the need for direct elections to the European Parliament, which would have to be preceded


by increased political powers for the Assembly, and will he say what specific action the Government are taking to see that that happens?

Mr. Hattersley: Concerning political union, the Government have always been more anxious to obtain a working definition of what that means than to make a judgment about that concept before the working definition is agreed.
On the subject of direct elections, the Government, through the Treaty of Rome, to which we are a party, are committed to eventual direct elections. On the other hand, a great deal of careful work needs to be done before we can recommend to the House the form in which those direct elections should be held. The Government will report regularly to the House on the way in which those consultations and examinations are going, but I do not think we can comment on speed or time until that work is done.

Mr. Marten: On the question of the powers of the Heads of State meeting, mentioned in an earlier Question, is not the distinction that the Heads of State have no power at all to legislate, whereas the Council of Ministers has such power?

Mr. Hattersley: I do not think one should become confused by legal niceties. One should have regard to the realities of the situation. If my hon. Friend examines the history of the Regional Development Fund he will find that the Heads of Government decided that there should be a fund and that the fund should be of a specific size. If he also follows the arguments whether they were legally entitled to do that, he will, I think, conclude that, irrespective of their legal entitlement, what they decided came to pass. I think this is likely to be the reality of the position in Europe for a very long time.

PARLIAMENTARY COMMISSIONER FOR ADMINISTRATION (CABINET PAPERS)

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I should like to make a statement about the supply of minutes of the Cabinet and of the relevant Cabinet Committees to the

Parliamentary Commissioner for Administration in connection with Court Line.
The policy now questioned was settled in 1966, and accepted by Parliament in that year.
Section 8(4) of the Parliamentary Commissioner Act 1967 says:
No person shall be required or authorised by virtue of this Act to furnish any information or answer any question relating to proceedings of the Cabinet or of any Committee of the Cabinet or to produce so much of any document as relates to such proceedings; and for the purposes of this sub-section a certificate issued by the Secretary of the Cabinet with the approval of the Prime Minister and certifying that any information, question, document or part of a document so relates shall be conclusive".
On 15th November 1966, when the Bill was before this House, this was not an issue between the parties. During its Committee stage the then Financial Secretary said, and this was accepted:
I do not think that there is any issue of substance between us. We are all agreed that we want to preserve the rule of Cabinet secrecy, and that, even though we have gone very far in this Bill in waiving Crown privilege, it is right to retain it for Cabinet papers. This, of course, means broadly not only the minutes of Cabinet proceedings themselves but other Cabinet business, including, of course, papers which are prepared prior to proceedings and which are discussed at proceedings. There is no issue about that".—[Official Report, Standing Committee B, 15th November 1966; c. 282.]
This was accepted by the Opposition spokesman and a clarifying Opposition amendment was withdrawn. The then Opposition made it clear that they were firmly opposed to disclosure of Cabinet proceedings.
As I made clear in the House yesterday, this has remained the policy of successive Governments.
When the Parliamentary Commissioner was asked to consider the Court Line case, it was necessary to decide which documents fell within the terms of Section 8(4) of the Parliamentary Commissioner Act. In order to be as forthcoming as possible, the Secretary of the Cabinet, with my approval, confined his certificate to those documents which constituted or recorded the actual transactions of a Cabinet Committee as distinct from the drafts of Cabinet Committee papers which could on a strict interpretation have been withheld under


the terms of Section 8(4). The Parliamentary Commissioner was also told the outcome of a Cabinet Committee's de-liberations—and this he records in paragraph 47 of his report—although he was not shown the Committee's papers. To that extent, the Government went beyond the 1965–66 policy in terms of disclosure.
The Parliamentary Commissioner has since made it plain that, contrary to some allegations, he did not ask to see documents which were withheld. He has also said publicly that he has no reason to believe that seeing the documents would have made any difference to his investigation.
I thought it right to take the time of the House in this brief statement so that the very important debate that will be held today should not be clouded or confused by allegations not relevant to matters before the House, nor, for that matter, even true.

Mrs. Thatcher: Is the Prime Minister aware that we accept his statement of the legal position under Section 8(4) of the Parliamentary Commissioner Act and, of course, we accept the assurances given by the then spokesman for the Opposition, the late Mr. William Roots, during the Committee stage of that Bill? Is the right hon. Gentleman aware that it would seem to follow, then, that the assurance given by the Secretary of State for Energy which led holiday makers to take a course of action other than that which they would have pursued must be attributed fully to the responsibility of the Government of the day and, therefore, that if the Secretary of State for Energy in no way exceeded his authority, this is a matter between him and the Prime Minister? Until that time we must assume that the doctrine of collective responsibility means that the Government were fully responsible for the assurances then given.

The Prime Minister: The Government accept full responsibility. I accept full responsibility. The Minister was speaking in that sense in the House. Today the House will debate the issues of what was said by my right hon. Friend on that

occasion. But the issue to which I have been forced to draw attention by this totally tendentious statement in the Press is the issue whether I withheld, as was alleged, in order to protect myself or anyone else, documents from the Parliamentary Commissioner which the Parliamentary Commissioner wanted or had the right to expect. The right hon. Lady is right that the House took the view that these documents should not be forthcoming. We went beyond the spirit of the Act by allowing documents to go which were not at the time of the debate envisaged as going. We have done that.
I hope that later the House will debate these very serious issues in this measure when discussing the matters raised in this newspaper pantomime of the last two days which was based on a complete misunderstanding of the legislation, despite the fact that The Times reported its terms accurately at the time and had leading articles supporting various measures contained in the Bill, but did not pursue the normal journalistic practice, before publishing such a front page article, of checking with my office about the allegations which they were making.

Mr. Richard Wainwright: Is not the real mischief of the false point which the Prime Minister has now so easily disposed of that it may have distracted public opinion from the real point of the Government's instant rejection of the Ombudsman's criticism of this case before the House has had a chance to study the Ombudsman's findings?

The Prime Minister: Although I do not agree with the hon. Gentleman's view about this, he is making a point which it is fair to make in debate. As so often happens, the raising of a false procedural point throws a smokescreen over the real issues which should be the subject of serious debate in this House. This is what was done over the weekend, and we can always expect the Opposition Front Bench to make the maximum point of it. In so doing, I think that they threw a smokescreen over the serious points which the hon. Gentleman wishes to raise.

BUSINESS OF THE HOUSE

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The business for the first week after the Adjournment will be as follows:
MONDAY 13TH OCTOBER AND TUESDAY 14TH OCTOBER—Remaining stages of the Community Land Bill.
WEDNESDAY 15TH OCTOBER—Consideration of Lords Amendments to the Sex Discrimination Bill.
Motions on the Price Code Orders.
Motion on the Incumbents (Vacation of Benefices) Measure.
THURSDAY 16TH OCTOBER—Remaining stages of the Welsh Development Agency (No. 2) Bill [Lords].
And, if there is time, a debate on Welsh Affairs, on a motion for the Adjournment of the House.
FRIDAY 17TH OCTOBER—A debate on EEC agricultural matters, including common agricultural policy, the green pound, markets, wheat, milk products and fisheries.
MONDAY 20TH OCTOBER—Debate on the Report of the Finer Committee on One-Parent Families, Command No. 5629.
Remaining stages of the Inheritance (Provision for Family and Dependants) Bill [Lords].
Proceedings on the Iron and Steel Bill [Lords], which is a consolidation measure.

Mrs. Thatcher: May I raise one minor matter with the Leader of the House? How long does he expect the debate on the Price Code orders to take? It is an important debate, and we would expect to have at least a full half-day on it.

Mr. Short: We shall see how long the debates on the Lords Amendments to the Sex Discrimination Bill take. I expect not very long. The other two orders—the negative order being put down by the Opposition and the affirmative motion put down by the Government—would normally go until 11.30 p.m. But we can discuss that if necessary.

Mr. David Steel: Has the Leader of the House noticed the understandable absence from the House of certain Scottish Members? Is he aware that Scottish State schools go back after the summer holiday on 20th August and that, for Scottish Members, a holiday with our families of less than two weeks is rather mean? Could not the right hon. Gentleman consider arranging for the House to rise for the Summer Recess in mid-July and for us to come back in mid-September, which would be much more tolerable from both the climatic and the practical point of view?

Mr. Short: I have already expressed my regret about this. There were two recent occasions when the House rose even later. But it is still too late. I hope that the way in which we arrange our annual timetable is one of the matters that we shall be able to consider in the new Session.

Mr. Welsh: As the White Paper on devolution will be published in the first fortnight in October, will the right hon. Gentleman find time to debate the matter?

Mr. Short: This will be a very long and detailed White Paper and I accept that the House will want to debate it ahead of publication of the Bill.

Mr. Mark Hughes: On the Friday when my right hon. Friend suggested that there should be a debate on European matters, members of the European Parliament will be involved in a plenary session of that Parliament and will not be able to be present here. Does this not cause some minor difficulty?

Mr. Short: This is a matter for the Parliament of the United Kingdom. I am giving a whole day to these matters.

Mr. John Davies: The right hon. Gentleman will remember that both he and the Prime Minister have said that there will be an early debate on the report of the Select Committee on Procedure on the handling of European legislation in this House. Can he give an absolute assurance, now that this has been effectively deferred until after the recess, that it will be taken very early after we return with a view to the implementation in the new Session of any decisions reached by the House?

Mr. Short: I very much hope we can do this. We are greatly indebted to the Committee for its report, and the right hon. Gentleman will agree that the House must arrive at a decision on this matter. His Committee is functioning very well indeed. If we can set up a merits Committee, as proposed by the Select Committee on Procedure, that would siphon off a number of European orders and enable the House to concentrate on the more important orders. I hope very much that we can do that.

Mr. Lipton: Will my right hon. Friend ask Government Departments to consider before 13th October my Early-Day Motion No. 653 relating to a Royal Jubilee Festival of London in 1977.
[That this House calls on Her Majesty's Government to organise a Royal Jubilee Festival of London in 1977.]

Mr. Short: This would coincide with the Queen's Jubilee and if my hon. Friend or anyone else would like to discuss this matter with me, I should be happy to meet them to talk about it.

Mr. Lane: Will the right hon. Gentleman bring in a short Bill during October to deal with the problem of squatters? Could he not find ample time for this by throwing out or pigeon-holing measures such as the Hare Coursing Bill?

Mr. Fell: The Government should drop some of their Bills.

Mr. Short: Certainly not. I realise that there is some concern about squatting, and hon. Members will have read the police statement about the powers they believe they have. No doubt my right hon. Friend the Secretary of State for the Environment will also be considering this matter. Perhaps I could bring the hon. Gentleman's question to his attention.

Mr. Spearing: My right hon. Friend has announced a large number of agricultural and fishing topics for the debate on EEC matters. Will he bear in mind the necessity of keeping some of these subjects separate, for instance agriculture and fisheries, and of assuring us that there will be an opportunity to put down amendments to individual documents, as the Government have promised us?

Mr. Short: My hon. Friend will recollect that I put down these documents for

debate on a previous Friday, but the House sat right through Thursday 24th July, past eleven o'clock, and we lost a whole day's business. I have now found another Friday for these seven orders, but I was proposing to debate them on a motion for the Adjournment.

Mr. Ridley: Could the right hon. Gentleman say when the Chancellor of the Exchequer will be bringing in his next Budget cutting public expenditure?

Mr. Short: In due course.

Mr. Guy Barnett: Will my right hon. Friend reconsider his reply to my hon. Friend the Member for Durham (Mr. Hughes) on the question of the debate on European matters? Thirty six Members of this House will be in Luxembourg, very possibly discussing agricultural matters. Would it not be as well to check with the business of the European Parliament to ensure that Members who have constituency and other interests in this country can be present for these debates?

Mr. Short: My hon. Friend can be present for this debate if he comes here. This is an additional hazard we have in arranging our parliamentary timetable. I will look at this matter, but I cannot give an undertaking that we can never discuss European matters when the European Assembly is sitting.

Mr. Peyton: Was I right in interpreting the right hon. Gentleman's reply to my right hon. Friend the Member for Knutsford (Mr. Davies) as the clear undertaking for which he asked? Immediately we return, will there be a debate on the report of the Select Committee on European legislation? Even though my hon. Friend the Member for Yarmouth (Mr. Fell) made has observation from a sitting position, that fact does not invalidate the important point he was making—that the House of Commons has been labouring under an excessive weight of legislation, not all of it of a very high quality. My hon. and right hon. Friends will look forward at a very early date after we return to discussing in the House the forthcoming load, which we all hope will be smaller in volume and better in quality. That is a very modest hope.

Mr. Short: I seem to have heard that before and I was prepared for it. The right hon. Gentleman will be interested


to know that in this Session we have not had as many days or passed as many Bills as we had imposed on us by the Conservative Party in 1970–71 and 1971–72. I know the right hon. Gentleman and the Leader of the Opposition want to forget about that Government, but in both those years we sat on more days and passed more Bills than we have in this Parliament. On the right hon. Gentleman's other point, he has constantly said that an interruption from a sedentary position does invalidate the point and has refused to take any notice of it. He had said that time and again over the last few weeks.

Mr. Peyton: The right hon. Gentleman's reply to my right hon. Friend the Member for Knutsford (Mr. Davies) was far from clear. Will he clear it up now?

Mr. Short: The assumption of the right hon. Member for Knutsford was correct.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I am concerned with the heavy load today.

QUESTIONS TO MINISTERS

Mr. Gow: On a point of order, Mr. Speaker. You will have seen that there were four Questions on the Order Paper to the Chancellor of the Duchy of Lancaster. Can you kindly tell the House when we shall have the opportunity of questioning the Chancellor of the Duchy of Lancaster?

Mr. Speaker: I am afraid that it will have to be on a day when previous questions and answers are shorter.

STEEL INDUSTRY

The Secretary of State for Industry (Mr. Eric Varley): Following his interim report of 4th February on the proposed closures of steelworks by the British Steel Corporation, my right hon. and noble Friend Lord Beswick has now completed his review of the proposed closures in Scotland. His report was made available to Members of the House this morning and will be printed in the Official Report.
The Government have accepted his recommendations.
This leaves outstanding only the proposed closures at Shotton, and of the Hartlepool and Consett plate mills.
We have not yet reached a conclusion on Shotton.
In the case of the plate mills my right hon. and noble Friend is awaiting the outcome of discussions between the BSC and the work forces about alternative proposals which would preserve the future of these mills.
The Government accept that the Scottish plants using the obsolescent open-hearth process should close once alternative supplies of steel become available from modern and more efficient plants in Scotland.
Ravenscraig is already being expanded as a bulk producer. The BSC now propose to build electric are plants at Hunterston and at Ravenscraig and to increase the capacity at Hallside. This will bring their capacity in Scotland to 4·2 million tonnes a year, perhaps more, a major step towards their target of 4½ million tonnes a year capacity by the early 1980s.
With the closure of the open-hearth plants there is no alternative to the eventual closure of the Clyde Iron Works and certain primary and product mills. The Clyde Iron Works closure will be no earlier than 1980. But the BSC propose to build at Hunterston two direct reduction units for making iron.
Following the review, BSC now propose to maintain into the 1980s the special steels facility in Scotland represented by the Hallside and Craigneuk mills about which there has been much concern. This will save 1,250 jobs.
BSC propose to develop and expand the Craigneuk steel foundry. For this to be a success the operations at Tollcross will have to be transferred to Craigneuk, but the BSC will give preference to the workers at Tollcross in filling the 300 new jobs at Craigneuk.
The BSC also propose to expand their capacity in Scotland for producing threaded pipe for oil and gas well casing. This latter proposal will give a net gain of 450 jobs.
The previous administration's White Paper of February 1973 on the BSC's 10-year development strategy said there would be a net loss of 6,500 job opportunities in Scotland over the period. The


changes I have outlined will cut this figure to 2,100 and some of these are deferred. This is, of course, still serious, given the general employment situation in West Central Scotland, and the Government will strengthen their attack on the industrial and environmental problems there. The Scottish Development Agency will play an important rôle.
The Cambuslang project announced by my hon. Friend the Minister of State at the Scottish Office on 30th June is a good example of the co-operation between the Government, the local authorities and the BSC. A determined effort will be made to attract new industry.
As a result of this review I believe that the Scottish steel industry will be more balanced and eventually emerge stronger and more competitive and so contribute to the British economy.

Mr. Heseltine: Does the Secretary of State agree that the paper placed in the Library this morning gives a different impression from that conveyed by his statement in that the number of jobs lost under the proposals is 6,990, of which he has, by his announcement, delayed 1,350 into the 1980's, leaving a net loss of 5,640? Is it not true that he has reached his lower figure of 2,100 by adding in the new jobs in projects which were unquantified in 1973 but which were largely anticipated in that year's White Paper? When does the right hon. Gentleman intend to end the uncertainty about Shotton? Will he tell us the latest estimates of the cost of the review to the British Steel Corporation? Does he realise that the process of this review is having a major damaging effect upon the corporation's modernisation?

Mr. Varley: I should have thought that the hon. Member for Henley (Mr. Heseltine) would by now be learning his lesson about jumping to conclusions over statements made to the House. If he is suggesting that my statement is not in accordance with the report by my noble Friend, I must tell him that what I have said is entirely in line with that document. He asked about the cost of the review. My understanding is that no major investment projects have been postponed or put behind time as a result of the review. Of course, we are anxious that the review should be carried through.
I should have thought that the hon. Member, who was a member of the previous Conservative Government, would not have complained too much about reviews which have taken place in view of the joint steering group on what my hon. and right hon. Friends called the "constitutional monstrosity" which was set up by the then Secretary of State for Trade and Industry. Shotton is a complicated matter which introduces considerations which involve expansion at Port Talbot, alternative proposals for Shotton, and the social consequences of steel making not being continued at Shotton. We need more time to consider these factors, which are most important.

Mr. Dalyell: On behalf of my hon. Friend the Member for Bothwell (Mr. Hamilton) who is inhibited by his office from speaking, may I thank my right hon. Friend for the reply, bearing in mind that the media generally were forecasting 4,000 job losses in Scotland? Is this not a move in the right direction, and will Lord Melchett's promise of two years' notice be honoured in view of the social consequences for Lanarkshire and Ayrshire?

Mr. Varley: The assurances to which my hon. Friend referred will be honoured. I thank him for his remarks made on behalf of my hon. Friend who is inhibited from speaking. What he has said is entirely in line with the statement by the chairman of the TUC steel committee this morning. He met my noble Friend and the General Secretary of the Scottish TUC and they praised the depths of the report, welcoming it on behalf of those they represent in Scotland.

Mr. David Steel: We on the Liberal bench regard the statement in broad terms as realistic and reasonable. Is the Secretary of State aware that the omission from the statement of any mention of the European Coal and Steel Fund Investment Bank and the regional and social funds is a little surprising? Regardless of the wider decision on devolution, is there not a case now for the Scottish Office setting up a liaison office in Brussels to take full advantage of these funds in the near future? Since it has been one of the scandals of the steel industry that it has been unable to supply piping for the North Sea oil industry, will the right hon.


Gentleman explain his reference in the statement to the corporation expanding its capacity in this respect?

Mr. Varley: The BSC is very anxious to take advantage of offshore development. The hon. Member will know of its stake in platform construction at Methyl. The casing projects were referred to in my statement. Whether it can get involved in other projects in the North Sea will depend on the outcome of the discussions on the plate mills and developments there. I can assure the hon. Member that the Corporation is taking this matter extremely seriously.
The European Community's involvement is a question for my right hon. Friend the Secretary of State for Scotland. The Scottish Office is well aware of these matters. In the Cambuslang project the European Commission was consulted and was involved.

Dr. Bray: Is the Secretary of State aware that this is only the beginning and not the end of the campaign to create a new steel and engineering complex in Scotland? We have accepted that some of our plants are obsolescent, but we want more investment and more jobs. We are getting some, but we need more. We welcome the announcement of new electric are furnaces at Motherwell and Hunterston, the delays to the open-hearth closures, continuation of special steel production in Scotland and the expansion of electric are capacity at Hallside. There are very unusual local employment problems, particularly at Cambuslang, and my right hon. Friend's Department and the Scottish Office will have to make efforts in the constituency of my hon. Friend the Member for Rutherglen (Mr. Mackenzie), who is the Minister of State in my right hon. Friend's Department, if Clydeside is not to have the blackest employment spot in Europe.

Mr. Varley: I very much welcome my hon. Friend's earlier comments and I agree with him that we have to make sure that we have an expanding steel industry in Scotland and that it is associated with an expansion of manufacturing jobs. That is what we intend to achieve. I am glad that he mentioned my hon. Friend the Minister of State whose constituency is affected. There are those of us who believe that my hon.

Friend has a direct line to the Department and is making representations to us about these matters.

Mr. Henderson: Does the Secretary of State not accept that it is time for an end to the sycophancy with which his statement has been greeted? Does he not accept that a redundancy is a redundancy however it may be cloaked and garbed by his statement? Does he agree that the pill he is forcing down the throats of Scottish steel workers is, in spite of its sugar coating, still a bitter one? Does he not accept that we have been acustomed for too long in Scotland to this talk of pie in the sky at Hunterston? Will he give an undertaking that the investment proposals are definitely to go ahead?

Mr. Varley: The investment programme is going ahead and has gone ahead. About £200 million has already been committed to modernisation in Scotland. The opportunist attitude of the SNP contrasts very much with the attitude adopted by those who know the Scottish steel industry and who represent its workers—people such as the General Secretary of the Scottish TUC and the chairman of the TUC Steel Committee. I hope that the hon. Member will not go around Scotland misrepresenting what I have said. What we shall have as a result of this statement is an expanding, not a declining steel industry in Scotland.

Mr. Small: I am most grateful to the Minister for the way in which he has handled this matter. In view of personal experience of creating a private enterprise steel town at Corby and the redundancies caused in the West of Scotland at that time, I should like to draw my right hon. Friend's attention to the re-engagement of people in the industry and how their chances of re-engagement will be monitored. In the past there has always been a problem concerning the monitoring of someone's right to be re-established. I hope that my right hon. Friend will give an assurance about the month-by-month monitoring of the opportunity for re-engagement of someone who is out of work.

Mr. Varley: I agree that there is a great deal of concern about how new jobs are created to give opportunities to those who are displaced in the industry. As my hon. Friend knows, redundancies will take place for a fairly long period in some


cases and, of course, the Scottish Development Agency will have a rôle to play. We are very conscious of the points made by my hon. Friend and we have them in mind.

Mr. Teddy Taylor: Does the right hon. Gentleman agree that his statement appears to have a harsh effect on the Glasgow area which has one of the highest rates of male unemployment in the country? How many of the lost jobs will be in Glasgow? On investment, does the Minister agree that many of the plans which he has announced today have already been announced several times by Ministers in this Government and, indeed, in the previous Government? If for any reason the investment plans are delayed, will the closures also be delayed?

Mr. Varley: Investment will go ahead, and is going ahead, on the basis announced to the House, even though the review was undertaken. I cannot give the hon. Gentleman precise figures about redundancies for Glasgow. We are considering the whole West Central belt of Scotland. I believe that if the hon. Gentleman considers the position of South Glasgow he will realise that in certain areas there is an expansion of jobs and in the others, particularly those mentioned by the hon. Gentleman, there is bound to be a decline. The situation must be viewed in the long term. The Scottish steel industry will expand even though there will be fewer people working in it.

Mr. David Watkins: Is my right hon. Friend aware that there will be great concern in my constituency and indeed in the surrounding area because the uncertainty surrounding the Consett plate mill is still not resolved? Will he give us any idea when a decision will be reached about this matter?

Mr. Varley: I cannot be precise on that matter, but further discussions are taking place with all the interested parties. I hope to be able to come to a conclusion quickly. I cannot be precise, but I hope that it will be before the end of the year.

Sir Anthony Meyer: Is the right hon. Gentleman aware that the deferment once again of a decision on Shotton after so many hopes have been held out and dashed and expectations not fulfilled

clearly places a moral obligation on the Government to find a continuing rôle for steel making at Shotton, bearing in mind its magnificent production record, total absence of industrial dispute and the consequences to the area of the loss of 6,000 job opportunities?

Mr. Varley: I cannot add much to what I have already said about Shotton. All the factors mentioned by the hon. Gentleman are being taken into consideration. That is the reason we are taking some time to consider the matter. This is a serious matter for the area and we want to get it right.

Mr. John Mendelson: Will my right hon. Friend bear in mind that his reference to future expansion of the industry nationwide and in the areas he referred to will, of course, depend upon keeping together a skilled labour force and those people who know and have inherited the knowledge of steel making and who can develop that knowledge? Will he now urge the corporation—giving Government help where needed—to have a policy of stocking steel as is now being proposed in certain parts of South Yorkshire? Will he make available Treasury help to make this policy possible? We do not want the stockholders to have to import large quantities of foreign steel when the upturn comes for British steel.

Mr. Varley: I give my hon. Friend the positive assurance that we shall look at the prospects of stocking steel. I do not know whether we can go all the way with my hon. Friend concerning the proposal that he has made not only in the House today but on other occasions. We are trying to see whether help can be given in that direction.
The British Steel Corporation is in a serious position. There has been an unprecented recession throughout the world in the steel industry. It has a capacity of approximately 27 million tons, but it is running at only 17 million tons a year. The expansion programme must go ahead to meet all the points made by my hon. Friend. We want to be in the position where the British Steel Corporation alone, by the early 1980s, will be producing approximately 37 million tons of steel. We must get all the other factors right. We must get the pricing policy, the productivity within the industry and


the capital structure of the industry right.

Mr. Peter Walker: The Minister has made an announcement concerning Scotland and presumably will be making others relating to Wales and England. When he has reached his decision, will he consider publishing a new White Paper with revised cost and production targets, thus bringing up to date the White Paper of 1973?

Mr. Varley: I cannot assure the right hon. Gentleman that we shall publish another White Paper. I shall try to supply as much information as possible. The right hon. Gentleman has slightly misrepresented the position. No doubt he will recall that a major statement on the review was made on 4th February by my right hon. Friend the Secretary of State for Energy. We must now settle the Hartlepools and Consett mills aspect, the Shotton problem and the further developments to Port Talbot.

Mr. Tinn: Will my right hon. Friend give any further information about the proposed plate mill development at Redcar and any possible closures that might be relevant or associated with it? Will he bear in mind that Teesside has already lost over recent years more steel jobs than are threatened in any other parts of the country, including Scotland and Wales? Does he agree that presently unemployed steelworkers on Teesside deserve at least as much consideration as potentially threatened steelworkers elsewhere?

Mr. Varley: I have the maximum sympathy for what my hon. Friend said. We are concerned about steel making throughout the length and breadth of the United Kingdom but I am sure that my hon. Friend will be the first to acknowledge that on Teesside and in the North-East there will be a major expansion which will be of general benefit to the area.

Mr. Michael Marshall: Does the Secretary of State agree that, however one might dress the figures in this instance, it is part of the ongoing and real problem of the closure of open-hearth facilities and of primary rolling which stems from the 1973 White Paper? This is a very serious problem and a natural extension of nationalisation and rationali-

sation. Will he take the opportunity of assuring the House that the Government will not seek to spread their hand to the independent special steel-making sector?

Mr. Varley: I want to see an expanding British steel industry in public ownership. I reject the hon. Gentleman's claim that some of the present problems have arisen because of public ownership. The position is nothing of the kind. When we consider the history of nationalised steel since 1967, we discover that the British Steel Corporation has done a remarkable job. The 14 companies, which were all in a state of under-investment, have reached the stage where there is in real prospect a profitable and expanding steel industry which will be able to take advantage of the upturn in the economy when it takes place.

Mr. Wrigglesworth: My right hon. Friend has mentioned the development on Teesside. Will he assure the House that the announcement he has made today, and any subsequent announcements, will not lead to any delays in the development of the complex on Teesside, or any cut-back in the final capacity that has been planned by the British Steel Corporation?

Mr. Varley: I am anxious that the programme should get ahead as quickly as possible. Much work has been done and a great deal of credit must go to Lord Beswick for the work he has done. I hope that the plans now laid and the other necessary decisions will be dealt with as speedily as possible.

Mr. Hardy: Is my right hon. Friend aware that the people of South Yorkshire believe that it is right to pay proper concern to Scotland? Can my right hon. Friend offer at an early date reassuring comments about the future of the Templeborough plant? Will the increased are plant development in Scotland increase the scrap problems in South Yorkshire?

Mr. Varley: I do not believe that the scrap problem will be exacerbated. On the question of the Templeborough works, the best thing I can do is to write to my hon. Friend.

Mr. Dempsey: Will my right hon. Friend accept the most grateful thanks of


the people of Airdrie for his announcement that they are to have 550 new jobs? Airdrie has one of the highest unemployment records in Scotland. Will my right hon. Friend believe me when I say that this news will be warmly welcomed and applauded by my constituents? Will he also accept that we are most grateful that great tribute is being paid to the excellent pool of labour that we have for meeting an expansion of this nature?

Mr. Varley: I thank my hon. Friend for his comments. I am sure that his view will be reflected by the majority of people in Scotland in direct contrast to the view expressed by the hon. Member for Aberdeenshire, East (Mr. Henderson).

Mr. Loyden: Will my right hon. Friend take into account that the adage that no news is good news will not be applicable to the Shotton situation? Will he also take into account that unemployment on Merseyside will be directly affected by the Shotton situation and the possibility of the closure of Birkenhead docks because of the loss of ore revenue? These matters concern people on Merseyside, particularly as one person in eight in that area is unemployed. I accept that at this stage the Shotton question has been shelved again. However, I urge my right hon. Friend not to make any further statements relating to Shotton unless they are made in this House and that nothing should be done during the recess. Will he assure us that such a statement, when made, will be made in the House?

Mr. Varley: I can give my hon. Friend the assurance that a statement will not be made in the recess regarding Shotton. When a statement is eventually made it will be made to this House. We are not in a position to make a statement about Shotton today because we are taking into consideration all the factors mentioned by my hon. Friend.

Following is the report:

REVIEW OF STEEL CLOSURES IN SCOTLAND, REPORT BY LORD BESWICK, MINISTER OF STATE, DEPARTMENT OF INDUSTRY.

My Interim Report on the review of the British Steel Corporation's proposed closures of steel plants was published on 4th February. The Report noted that I still had to complete my review of the proposed closures in Scotland and of the closures of the Hartlepool and Con-

sett plate mills consequential on the BSC's proposal to build a new plate mill at Redcar. I considered also that further study was needed of the economies of modernised steelmaking at Shotton and its implications for BSC's proposals elsewhere.

2. I have now completed the review of the proposed closures in Scotland and my conclusions are being announced immediately so as to reduce the present uncertainty. Consideration of the proposed closures at Shotton is not covered here. Consideration of the closures of the Hartlepool and Consett plate mills, which are associated with the proposed plate mill at Redcar is awaiting completion of the discussions between the BSC and the workforces at Hartlepool and Consett on alternative proposals which would preserve the future of their mills.

3. I first visited all the plants concerned in Scotland to get a feel of the situation. I then held formal tripartite discussions with the BSC and the TUC Steel Committee. I have also had several meetings with the Scottish TUC, including one during the Prime Minister's visit to Glasgow on 27th February and I have met the constituency MPs affected. As elsewhere I have been immensely impressed by the positive and constructive attitude of management, trade unions and workers at all levels. The Minister of State, Scottish Office, has been closely involved at all stages and agrees with my recommendations.

4. Because of the close interconnection which exists between the Corporation's plants in Scot land, I have had to consider not only the individual closure proposals but also how those proposals or variants on them would affect the Corporation's wider plans for developments in Scottish steelmaking. Arising from my review, the Corporation have revised their proposals for closures and have come forward with fresh proposals for new investment. I welcome these changes and recommend their acceptance. I deal first with the proposed closures. A table showing the number of jobs involved and sum marising the recommendations is annexed.

ORE HANDLING

General Terminus Quay

5. I recommend that the closure should be confirmed in view of the development of the much larger and more efficient Hunterston ore terminal.

IRONMAKING

Clyde Iron

6. There is in my view no alternative to the ultimate closure of the Clyde Iron works once the open hearth furnaces (see paras, 7–8 below) have closed and adequate new supplies of iron are available in Scotland. The BSC have agreed that the final closure date will not be before 1st January 1980 and they will ensure that the closure is managed in an orderly way so as to maximise the opportunities for the employees affected to obtain alternative jobs. The eventual closure will also facilitate the Government's plans for general industrial development in the Cambuslang recovery area, inter alia, by removing a source of pollution.

OPEN HEARTH STEELMAKING

7. I have concluded that the BSC have made out their case for closing open hearth steel-making at Clydebridge, Dalzell, Lanarkshire, Ravenscraig and Glengarnock once alternative supplies of steel for the related product mills have become available from more modern and efficient plant in the area. The submerged injection process as proposed by the workers at Clydebridge would not improve the economics of the open hearth process sufficient to justify its retention there.

8. However, following the review, the BSC propose to close these works later than originally intended. The position is as follows:



Date initially proposed for closure
Deferred date now proposed


Clydebridge
1976–77
July 1977–January 1978


Dalzell
1976–77
July 1977–January 1978


Ravenscraig
1977–78
July 1977–January 1978


Lanarkshire
1977 or earlier
July 1977–January 1978


Glengarnock
Not before 1978–79
Not before 1st January 1980


The new closure dates remain dependent on the Ravenscraig expansion project being commissioned in 1977 and thus ensuring that the Corporation is adequately equipped with low cost capacity to feed the product mills when demand has strengthened again. The 1980 closure of Glengarnock steelmaking will depend on steel for its mill becoming available from a new electric are furnace at Hunsterton (paragraph 16 below). The timing of all these closures would be carefully phased in consultation between the BSC and the unions.

PRIMARY ROLLING

9. I consider that the BSC have made out their case for the closure of the Clydebridge slabbing mill in view of the proposed installation of a third slab caster at Ravenscraig. Similarly, primary rolling at Glengarnock will have to cease once blooms are available from new capacity elsewhere.

PRODUCT MILLS

10. I accept that the Dalzell light section mill and bar mill will have to close with the closure of the Dalzell open hearth plant, i.e. in the period July 1977–January 1978.

Hallside Billet Mill/Craigneuk Bar Mill

11. I have been impressed by the arguments advanced by local MPs, local authorities, trade unions and the workers themselves for the retention of these "special steel" facilities which the BSC had proposed to close in 1976–77. The BSC have reconsidered their position and now propose to keep these mills in operation into the 1980s. The Corporation will undertake the necessary capital expenditure (estimated roughly at £1 million) to secure the best performance from these mills, obsolescent

as they are in some respects. The BSC have also undertaken to increase the capacity of the electric are furnace at Hallside to about 250,000 tonnes a year so as to maintain supplies from the Hallside billet mill to the Craigneuk bar mills as well as steel for other mills in Scotland as desired. All this will retain an identifiable special steel facility in Scotland into the 1980s.

FOUNDRIES

Hamilton

12. Following my discussions, the BSC are reviewing the potential market for the products of this small iron foundry. Therefore, the closure of the foundry should not be confirmed now. When their review of the market is completed, the Corporation will discuss the future of the foundry with the Unions through the normal procedures.

Tollcross

13. I welcome the BSC's proposals for the redevelopment and expansion of the Craigneuk steel foundry; this is in line with the Government's policy for the ferrous foundry industries as incorporated in the new scheme for financial assistance under Section 8 of the Industry Act 1972 (for which the BSC will be eligible). For the new investment at Craigneuk to succeed, I have found no alternative to BSC's proposal to concentrate the Craigneuk and Tollcross operations on the Craigneuk site. I recommend therefore that the closure of the Tollcross steel foundry be confirmed. The Corporation have undertaken that, in recruiting for the new 300 job opportunities arising from the development at Craigneuk, preference will be given to the workers from Tollcross, half of whom live between Tollcross and Craigneuk which are less than 10 miles apart. This will, inter alia, retain within the Corporation people with the special skills of foundry work.

NEW INVESTMENT PROPOSALS

Direct Reduction Plants at Hunterston

14. Following the announcement last year of the Corporation's intention to build a plant at Hunterston for the manufacture of iron by the direct reduction process, the Corporation have now decided to proceed with the construction of two 400,000 tonne units there; the total investment in both plants is estimated at £55 million (at current prices), providing about 150 jobs from 1978; priority in filling these jobs will be given to workers becoming redundant from steel plants affected by closure.

NEW STEELMAKING PLANT

15. The Corporation, like the Government, are committed to a target of 4½ million tonnes of steel capacity in Scotland by the early 1980s, including up to a million tonnes of new electric are capacity. I have carefully considered the many representations made to me that 3·2 million tonnes is too optimistic a target for output from the expanded plant at Ravenscraig. I am very conscious of the need for new plant in Britain to match up to the efficiency of similar plant overseas if we are to have an internationally competitive steel


industry in the 1980s; there is a responsibility on both management and workers to cooperate in achieving this. However, whilst the Corporation must continue to aim at an output of 3·2 million tonnes at Ravenscraig, it would be more prudent to use a figure of 3 million tonnes when assessing supplies to the product mills in Scotland.

16. The Corporation have not hitherto determined where they wish to locate new electric are capacity and various sites for this were suggested to me by MPs, local authorities and workers' representatives as a way of mitigating the social effects of the proposed closures and of providing a more secure supply of steel for Scottish product mills. I have discussed these proposals with the Corporation. The Corporation now propose to build an electric are plant at Hunterston of about 250,000 tonnes capacity which will produce continuously cast blooms for rolling at Glengarnock. This would, inter alia, provide evidence of their intention progressively to develop the Hunterston site. The closure of the open hearth furnaces and primary rolling at Glengarnock will be phased to the availability of steel from Hunterston. The cost of the new electric are and continuous casting plants is estimated at £35–£40 million at current prices, providing about 280 new jobs.

17. The Corporation are also prepared to uprate the capacity of the electric are furnace at Hallside from 150,000 tonnes to about 250,000 tonnes at a cost of £1 to £2 million (see paragraph 11 above).

18. I also concluded that there are good reasons for constructing a new electric are plant in the Motherwell area inter alia to help offset the social effects of the closures of the open hearth furnaces. Following our discussions, the Corporation propose to build a new electric are plant of about 250,000 tonnes capacity at Ravenscraig. They consider this the most suitable site in the Motherwell area as the plant would be well integrated with other facilities at Ravenscraig and would still have ready access to the Dalzell and Lanarkshire product mills. The cost of this plant is estimated at up to £20 million and it should provide an additional 50 jobs in the Motherwell area.

19. These developments will provide an additional 600,000 tonnes of electric are capacity in Scotland, bringing BSC's steel capacity in Scotland to 4·2 million tonnes, easily maintaining the Scottish share of BSC's steel production in the United Kingdom. I have agreed with the Corporation that it is premature to consider at this stage where the balance of electric are capacity in Scotland should be sited This can best be examined in the light of production and market development over the next few years.

PIPE PRODUCTION

20. The Corporation propose to expand their capacity for producing threaded pipe for the casing of oil and gas wells by new investment of £25 million at Clydesdale works near Motherwell and at Imperial Works in Coatbridge. This will provide 550 new job opportunities at Imperial but a reduction of about 100 job opportunities at Clydesdale, i.e.

a net gain of about 450 jobs. It will yield a better balanced and more economic operation and will enable the Corporation to continue to supply the major proportion of the North Sea market for casing.

EFFECT ON JOBS

21. The White Paper of February 1973 on BSC's 10 year Development Strategy gave a net reduction of about 6,500 jobs in Scotland over the period of the strategy. The Corporation subsequently predicted a gross loss in job opportunities (including Clyde Iron and Glengarnock open hearths) of about 7,000 to be partially offset by 2,400 new job opportunities, giving a net job loss of about 4,600. My recommendations would result in the saving of 1,350 jobs and the deferment of most of the remaining job losses by 1 or 2 years. The Corporation's proposals for new investment provide for 3,525 new jobs, thereby reducing the net job loss to about 2,100.

22. These losses are inevitable if we are to phase out obsolescent processes for steelmaking and provide a modern and thriving steel industry in Scotland giving secure employment to those remaining in the industry. The success of that industry will hinge on its ability to supply steel to using industries both at home and abroad, at internationally competitive prices and qualities. This in turn will require steel plants—whether already in existence, now being built or newly planned following the review—to be run in accordance with international standards of operational practice and manning: otherwise the prospects for British steel, including Scottish steel, remaining competitive in the 1980s may be grim.

ALTERNATIVE EMPLOYMENT

23. As noted in my Interim Report (paragraph 16), it is the policy of the Government to ensure that everything possible is done to provide alternative employment in areas affected by closures. During my visits to plants in Scotland proposed for closure, I assured the workers concerned that certainly no less would be done for them than we undertook to do in the case of closures in England and Wales confirmed in my Interim Report. However, it is difficult to provide for alternative employment while uncertainty exists as to whether a closure will take place and if so, when.

24. The redundancies in the steel industry must be taken in the context of the general employment situation in West Central Scotland. The Government's efforts, therefore, must be directed at maintaining and enhancing the attack on the industrial and environmental problems of the region as a whole. The areas affected by the steel closures are all closely linked and all, with the exception of Glengarnock, within the Scottish Special Development Area. The full range of regional policies is already brought to bear to attract new employment. There has been some success in the past—between 1959 and 1973, mobile industry created some 35,000 new jobs in Scotland; nearly 8,000 further jobs are in prospect. The slowing down in the creation of new employment recently has been largely due to the general economic situation.

25. BSC is already pursuing a number of policies aimed at attracting new industry to the area. The Cambuslang project, announced by the Minister of State at the Scottish Office on 30th June provides a good example of


ANNEX


Proposed Closure
Number of Lost Job Opportunities
Original Date of Closure
Recommendation


General Terminus Quay
60
1974–75
BSC proposal agreed.


Clyde Iron Works
1,220
1978–79 or later
Closure deferred until 1st January 1980 at earliest.


Clydebridge (OH Furnace, Primary Mill).
1,000
1976–77
Closure deferred until July 1977–January 1978.


Dalzell (OH Furnace, Primary/Bar and Section Mills).
1,030
1976–77
Closure deferred until July 1977–January 1978.


Lanarkshire (OH)
390
1977 or earlier
Closure not until July 1977–January 1978.


Ravenscraig (OH)
460
1977–78
Closure during July 1977–January 1978.


Hallside (Primary and Billet Mills).
450
1976–77
Plant to be retained into 1980s.


Craigneuk (Bar Mills)
800
1976–77
Plant to be retained into 1980s.


Clydesdale (OH)
600
1975–76
BSC proposal agreed; already replaced by new electric arc.


Glengarnock (OH Furnace and Blooming Mill).
530
1978–79 or later
Closure deferred until not before 1st January 1980, dependent on steel from Hunterston electric arc.


Tollcross (Foundry)
350
1975–76
BSC proposal agreed because of expansion of Craigneuk and job availability there.


Hamilton Foundry
100
1977–78
Closure not confirmed pending outcome of market survey.




Number of lost job opportunities as initially proposed
…
…
6,990


Less Hallside/Craigneuk Mills and Hamilton Foundry
…
…
1,350


Number of lost job opportunities now agreed
…
…
5,640




New Investments
New Job Opportunities


Hunterston—


Ore Terminal
…
…
…
…
…
…
190


Direct Reduction Plants
…
…
…
…
…
…
150


Electric Arc
…
…
…
…
…
…
280


Hallside Electric are Expansion
…
…
…
…
…
…
Negligible


Ravenscraig—


BOS Expansion
…
…
…
…
…
…
1,500


Electric Arc
…
…
…
…
…
…
50


Clydesdale Electric Arc
…
…
…
…
…
…
400


Clydesdale/Imperial Tubes.
…
…
…
…
…
…
450 (net)


Dalzell—


Plate Mill
…
…
…
…
…
…
100


Beam Welding
…
…
…
…
…
…
105


Craigneuk—Foundry
…
…
…
…
…
…
300


 Total
…
…
…
…
3,525


Therefore, net job losses = 5,640 less 3,525


= 2,115

CENTRAL REGIONAL COUNCIL (LOANS)

Mr. Canavan: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing an issue which is causing widespread and growing concern throughout the whole of Scotland and my constituency in particular, namely,
the use of public money to provide low-interest rate loans to high-salaried local government executives.

co-operation between Government, local authorities and BSC. A determined effort will be made to attract new industry to this site in conjunction with land reclamation and the development of new factories by the Scottish Development Agency once it is established.

Last week it was reported that a meeting of the Policy and Resources Committee of the Central Regional Council decided, by the casting vote of the convener, to go ahead with its offer of loans to certain top officials at an interest rate of 5½ per cent., about half the current mortgage rate. It was also reported that advice was given to the committee that is was legally obliged to give the loans. There has also been speculation as to whether the council's professional advisers


stood to gain by the acceptance of their advice.

The Chief Executive of the Central Region, Mr. Eric Geddes, is to receive a loan of £30,000 to purchase a mansion house in Dunblane. Yet Mr. Geddes is reported to be receiving £30,000 for the sale of his present house in Edinburgh, and he also owns a 200-acre farm in Dumfriesshire.

It is also disturbing that last week it was decided to ban the Press from the Central Regional Council sub-committee meetings in the very week when newspapers, such as the Daily Record and the Scottish Daily News, had done a great public service by bringing this whole business to light.

Standing Order No. 9 states that the matter to be discussed must be specific and important enough to merit urgent consideration. I have done my best to be specific. The importance of the matter can perhaps best be judged not only in the principles at stake but in the fact that nearly one-quarter of a million pounds of public money is initially and immediately involved in one local authority area alone. Many of my constituents have communicated their concern to me. Only last weekend I addressed a meeting of irate ratepayers in Denny who are facing a rate increase of over 100 per cent. The whole affair is in danger of bringing local government and possibly central Government into disrepute unless something is done immediately.

Only yesterday a Central Regional councillor, Mr. Sam Ovens, acting in his capacity as a private ratepayer, publicly announced that he intends to apply for an interdict to stop further loans. Why should it be left merely to one individual to take action?

Unfortunately many Scottish local authorities are in recess during August, and we go into recess tomorrow. Before we do so, I submit that this specific and important matter should be discussed by Parliament. The use of Standing Order No. 9 appears to be the only way of achieving this objective. People in Scotland and other parts of the United Kingdom are demanding immediate action to stop this lunatic squandering of public money.

Mr. Speaker: The hon. Gentleman gave me notice that he intended to seek leave to make this application. I have listened to him carefully. He has put forward an important matter. I think that he was rather an optimist to think that I would grant his application today. I have limited opportunities at the moment because of the business already fixed for today and tomorrow. I am afraid that the answer must be "No".

STATUTORY INSTRUMENTS

Ordered,
That the White Fish and Herring Subsidies (United Kingdom) (No. 2) Scheme 1975 be referred to a Standing Committee on Statutory Instruments.—[Mr. Thomas Cox.]

BUSINESS OF THE HOUSE

Motion made, and Question proposed,

That, at this day's Sitting, Mr. Speaker shall put any Question necessary to dispose of proceedings on the first Motion in the name of the Prime Minister for the Adjournment of the House not later than Seven o'clock.—[Mr. Thomas Cox.]

Mr. J. Enoch Powell: The precedents for this type of motion are becoming so numerous and varied that I think it is perhaps worth a minute of the time of the House to place on record that a motion of this type is neither necessary nor desirable. In doing so I wish to thank the Patronage Secretary for his courtesy, knowing my interest in this matter, in letting me know that the motion was to be tabled.
On the Adjournment the subject to be discussed is determined only by convention and general agreement. However, I am sure that if there were agreement, as I understand there is, that two subjects should be discussed on the Adjournment at this day's sitting and if a right hon. or hon. Gentleman from the Opposition Front Bench were to rise between six and seven o'clock he would catch your eye, Mr. Speaker, and would be followed by the Minister replying from the Government Front Bench. Following that, should there be a desire in any quarter of the House to challenge the matter by carrying the motion for the Adjournment, it might be assumed that, with your permission, that Question would be likely to


be put to the House. The result would be that, supposing the motion for the Adjournment were not carried, the Government would propose the Adjournment again and the debate would continue on the subsequent topic.
For a long time past on matters of this kind and on days divided between two subjects, the House has been able, by its normal procedures, to discipline itself. I believe that it is still capable of doing so without motions of this character. Therefore, I trust that the assurances previously given by the Leader of the House that this matter will not be allowed to go very far without specific consideration by the Select Committee on Procedure will be regarded as urgent.

Question put and agreed to.

EMPTY HOUSING (PREVENTION OF SQUATTING)

4.8 p.m.

Mr. John Cordle: I beg to move,
That leave be given to bring in a Bill to make it illegal for people to occupy empty premises without the permission of the owner.
This Bill would deal effectively and at once with the national scourge of squatting, because squatting has now become a rampant social evil.
The nature and extent of the problem posed by highly organised bands of squatters causes the overwhelming majority of decent, hardworking, law-abiding citizens to feel distinctly uneasy. A significant number of active leaders are political extremists determined to cause the maximum possible nuisance and annoyance both to private persons and to public authorities.
I shall cite one single example—the organised squat in and around Elgin Avenue in the Maida Vale area of London About 600 squatters have been organised by the International Marxist leader Mr. Piers Corbyn, who was quoted recently in our national daily Press as saying that squatting was
all useful preparation for the revolution.
It is apparently a fact, incredible though it may seem, that there is in circulation a handbook called "The Squatters Handbook", which lists properties which are considered to be ripe for squatting and actively encourages people to join this particular type of lawlessness.
Recently in Ipswich squatters have been politically motivated, and at weekends in the town centre they hand out Communist literature. They purchase rent books from W. H. Smith, the booksellers, fill these in and claim that they are paying tenants, which adds further confusion and disruption. There is no doubt that squatting has become fashionable and is a menace to local authorities.

Mr. Frank Allaun: So are empty houses.

Mr. Cordle: The housing programmes are held up because squatters move into property that is due to be demolished and/or renovated. Almost completely new and/or refurbished properties are


suddenly occupied just before they are finally completed and ready for families on the housing lists who have been waiting to move in.
Squatting is a menace to private individuals whose homes are invaded while they are away for a few weeks' holiday. Miss Harper of Kensington, whose case sparked off a great deal of correspondence in The Times recently, proved the point. There are others whose homes have been broken into while they are empty awaiting the new owner after the owner has moved house.
Therefore, in order to deal with this menace of squatting and the conspiracy to trespass, it is quite clear that the law must be amended. The present legal position is nothing short of absurd. The sophisticated mid-twentieth century revolutionary confronts the full majesty of the law of medieval England and exploits his advantage to the full. As the law stands today, in order to initiate a squat in a locked and secured building, someone commits an offence by making a forcible entry. Thereafter all the remaining persons who take up residence in the building commit no offence by merely walking through the open door. It is invariably impossible to obtain evidence about the commission of the original offence.
What must be done, and done speedily, is to sweep away the old law—the statutes on forcible entry covering the years 1381 to 1623—and to enact a new code designed to deal with the existing and anarchistic menace. The nature and magnitude of the problem clearly indicate that the time has passed when squatting can be considered a civil matter alone. The organised squatters wish to threaten the Queen's peace. Their attitude to the rule of law is totally hypocritical. They are content to break the law to gain initial entry and thereafter they seek to claim the protection of that law to continue in possession. They wish to challenge the rights of the individual citizen to be and feel secure in the enjoyment of his property.
All these factors make it imperative that this menace to society should be recognised as a criminal threat and dealt with by the criminal courts and police.

Last week, Sir Eric Sachs, formerly Mr. Justice Sachs, wrote in a letter to The Times that:
A primary duty of the police is to protect citizens and their property against criminals. The common law, with innate good sense, provides on this occasion—as on many others—protection of the citizen 'when he has to defend himself against many combined to do him injury'.
I shall take the example of the man who returns from holiday to find that his house had been taken over by a band of squatters. Surely he should be entitled to summon the assistance of the police to come and forthwith restore him to his home. If that were the law, the law would accord with common sense and justice. It is vital, if respect for the law is to be fostered and encouraged by this House, that whenever a law is seen not to accord with either common sense or justice it should be speedily brought into line with those vital principles.
The present law does nothing to deter squatting. The new law should deter it by enacting that each and every person who remains on property, having been ordered to leave by the owner, commits an offence which is punishable by imprisonment and/or a fine. The new law should also provide a further deterrent of enabling the owner to claim compensation calculated by the value of the occupation to the offending squatters—that is, a payment of money equivalent to rent. If those squatters or persons contemplating squatting realised that their activity would be no cheaper than behaving lawfully and would involve them in trouble before the criminal courts, there would be some effective deterrent.
I stress that urgent action is required now. The Government have recognised that there is a problem but they refuse to take speedy action. In this the Government are out of sympathy with the wishes of the vast majority of the people who are deeply conscious of the absurdities and inadequacies of the existing law. A change is needed now.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Cordle, Mr. Marcus Fox, Mr. Edward Gardner, Mr. Ifor Davies, Mr. Ron Lewis, Mr. Graham Page, Mr. Ronald Bell, Mr. J. Grimond and Mr. Geoffrey Finsberg.

EMPTY HOUSING (PREVENTION OF SQUATTING)

Mr. John Cordle accordingly presented a Bill to make it illegal for people to occupy empty premises without the permission of the owner; and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 232.]

COURT LINE LIMITED

Motion made, and Question proposed, That this House do now adjourn.—[Mr. John Ellis.]

4.18 p.m.

The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore): Let me start by putting to the House certain simple but highly relevant facts.
First, the subject of these reports is the last chapter in the story of the collapse of Court Line Group, Britain's largest air travel operator. That firm collapsed on 15th August 1974, not because of the actions of Government but in spite of our serious efforts to avert it. The whole story of events that led to its collapse must await the final reports of the company inspectors.
However, it is clear to everyone now that the strength of Court Line has been irreparably sapped by the failure of its own management decisions combined with the drastic change of circumstance affecting the air travel industry last year. The last serious error made by the company is covered by the inspectors' report: the decision to acquire the collapsing and debt-laden travel firm Horizon in February 1974—a decision taken, as I understand it before the present Government were formed.
Secondly, the collapse revealed the inadequacy of the arrangements previously made under the 1971 Civil Aviation Act to safeguard holidaymakers. The fall-back bonding scheme was revealed to be quite insufficient in scale to compensate holidaymakers for the losses incurred in the failure of the firm. I should remind the House that it was not only Court Line but several other air travel operators who crashed last summer.
Thirdly, the House will be aware that the Government became involved outside the regulatory function of the Civil Aviation Authority only when Court Line approached the Department of Industry to negotiate the sale of its shipbuilding assets. The Government's decision to buy these assets could not have had any effect in the short term other than a beneficial one for the rest of the Court Line operation.
Further, in relation to their own conduct the Government have not brushed aside or dismissed the reports of the Parliamentary Commissioner or the inspectors. We recognise that these reports have been prepared with scrupulous care and we take very seriously the conclusions that they reach. It would have been easy for us to accept their conclusions without further ado and to offer an apology—as the right hon. Member for Penrith and The Border (Mr. Whitelaw) suggested last week.
The House is always rightly indulgent in these circumstances, and if we had been seeking an easy way out that would have been the obvious course to take. But we have not done so, and when I say "we", I mean, of course, the Government as a whole—not because we are stiff-necked, either collectively or individually, but because we have considered their findings with a care matching that of the authors of these reports, and because we have concluded, with reluctance and respect, that we simply cannot agree.
That is clearly a grave conclusion which I must now explain. Let me remind the House of the chain of conclusion and argument that the two reports contain. According to the inspectors, the Government were right to buy the shipbuilding subsidiary of Court Line on 23rd June. Further, the price agreed, £16 million, was the right price to pay. Next, the Government's statement of 26th June was, as they put it, not
in any way untrue or reckless".
On the contrary, the Government made
an honest and careful assessment of the information available to it.
Further, and most important, according to the inspectors,
We do not complain that the Government expressed confidence in the company. They had material for doing so".
On all these points there is little or no difference between the inspectors and the Parliamentary Commissioner. In his report the Parliamentary Commissioner affirms that
what was done and said publicly was done and said in good faith".
He also acknowledges
that the confidence that both officials and Ministries felt at this stage, honestly and in good faith, about the continued viability of the Court Line holiday activities for the rest of

1974 season was based essentially on the financial information supplied by Court Line immediately before and during the weekend discussions, and critically examined by officials so far as was possible during that short period, and on the opinions expressed by directors and their advisers".
Again, he says:
Very properly, the Government accepted an obligation to incorporate in public statements about the negotiations references also to the future, as the Government saw it, of that business.
Where, then, does the criticism lie? In the words of the inspectors,
Our complaint is that the Government was in no position to express unqualified confidence,
and in the words of the Parliamentary Commissioner
undue confidence should not be created or maintained".
This raises two questions: whether in fact the statements made were expressions of "unqualified confidence" and, second, what would have been the effects of a more qualified statement had one been made.
On the first point, and after serious reflection, the Government hold the view that the use of such words as
this should stabilise the situation in respect of Court Line's interests
and again
that holidaymakers should have some reasonable security
fall short of expressions of unqualified confidence, let alone constitute a guarantee. That must also have been the view of the Association of British Travel Agents, which sought further assurances from the Court Line Group, immediately after the Government's statements were made.
Since we are dealing with matters of emphasis and nuances of expression, it is worth while reminding the House of the difference between the language used in the Government's statement and the statements subsequently used by the directors of Court Line itself when they were approached by representatives of ABTA. I quote from Mr. Blonfield, the director of Court Line, in a letter issued on 3rd July:
This sale means that Court Line is now in a position to maintain and develop its aviation and leisure interests with the necessary financing and backing to support an ongoing operation. All compartments in the leisure division,


as well as in the aviation division are therefore secure",
He added:
We have the products, we have the management, we have the necessary finance.
That was followed by a meeting between representatives of ABTA and Mr. Young, the Managing Director of Court Line, who, amongst other things, said on 5th July:
The Court Line leisure and aviation divisions are operating normally and agents need have no doubts or fears when accepting bookings for our programme".
I do not believe that anyone can dispute that these statements on behalf of Court Line were in fact "expressions of unqualified confidence". Equally, I do not see how anyone can fail to conclude that the statements made by the Government were of a different character and fell far short of that degree of confidence that the Court Line directors expressed.
It will not have escaped the attention of the House that both the inspectors and the Parliamentary Commissioner themselves emphasise how fine the point of judgment is. In the words of the inspectors,
it is a matter of finely balanced judgment as to the precise degree of confidence to be expressed",
and according to the Parliamentary Commissioner
it must always be a difficult exercise in judgment to decide how much or how little it is right and fair to say publicly in the sort of situation which faced the Government in this case.
But, equally important, we have to ask ourselves the question: what indeed would have been the effect if a slightly more cautious statement by the Government had been made? Both reports draw attention to a draft supplementary answer included in the Secretary of State for Industry's brief. The question that might have triggered that supplementary reply was never asked. But if, in fact, he had used the most important of the suggested words,
Obviously I cannot give a guarantee about an independent commercial operation but, certainly people's prospect of getting their holidays have been greatly improved by the Government's actions",
can we really believe that this would have had any deterrent effect on prospective holidaymakers?

The Parliamentary Commissioner himself discusses this matter and doubts whether a qualification of this kind would have significantly altered the volume of bookings in Court Line. If this is correct, it is clear that Court Line would still have collapsed on 15th August, with all the consequences that followed.
But if the Government had given a strong warning to holidaymakers, if they had implied that they were seriously worried about the state of the company—against the information they had before them—there could be no doubt that Court Line would have been brought to a point of collapse within hours of the statement. Imagine the situation then. If that had happened, if the Government had made a statement in June 1974 that brought Court Line to a collapse, we can well imagine what charges would then have been made. It would have been said that owing to an incautious statement at a time when confidence was of crucial importance, the Government had unnecessarily brought disaster to a major enterprise and to the hundreds of thousands of people whom it served.
Judging by the kind of statements which the hon. Member for Henley (Mr. Heseltine) has been making in the past 12 months, we would almost certainly have been accused of destroying a great free enterprise firm—and deliberately doing so—and no doubt there would have been a demand for an investigation by the Parliamentary Commissioner into our alleged mismanagement of the whole course of the affair.

Mr. Kenneth Lewis: I have not an interest in the package tour business but I have an interest in the travel business. I do not think anyone has suggested that the Secretary of State would have been right to have made a statement suggesting that Court Line was likely to collapse. That would clearly have created a disastrous situation in the opposite direction. What we campaign about is that the then Secretary of State for Industry went too far in the other direction. That is precisely what the Parliamentary Commissioner complains about and what the right hon. Gentleman will not accept.

Mr. Shore: The whole of this debate is, in a sense, about how far is too far. It is, as I have said, a matter of the finest


possible point of judgment. There is here a real dilemma which is not solely about Court Line, although that is the immedate subject of the debate. There will always be cases, under any Government, where a company, known or suspected to be in financial difficulty, perhaps only temporarily, is discussing with the Government some form of financial assistance, or the sale of some assets, and it is obviously right that the House and the public generally should so far as possible be kept informed. There is a very real problem in deciding what to say.
The Government must come to a view—however provisional, and however much based on incomplete information—about the longer-term effects of their decision on the company. Obviously that view must be as honestly and carefully justified as the circumstances, which may well involve acting very quickly, allow. The Government must expect to be questioned in this House about what that view is and give it. In these circumstances, great care is of course needed—as the Parliamentary Commissioner himself says, but it must always be a difficult exercise in judgment. I invite the House, however, to consider as a general problem whether in cases of this kind any statement can be made which does not run the risk that someone, somewhere, may possibly be misled in the light of subsequent and unforeseeable events.
The Government cannot condemn themselves or the many great enterprises with which they deal to the consequences of total silence. That truth is known by the responsible members of the Opposition Front Bench as it is by those of us here on the Treasury Bench.
I turn now to the important and practical issue of the holidaymakers. The question of compensation for those who lost their holidays is not directly raised in either report although the Parliamenttary Commissioner quotes the statements that I and my Under-Secretary made during the course of the Air Travel Reserve Fund Bill to the effect that nothing in that Bill would disbar us from taking further measures if we thought it right. I use the word "further" deliberately because, as the House will know, Her Majesty's Government, recog- 
nising the failure of the earlier bonding arrangements to give that security which the public could reasonably have expected, have already greatly strengthened the protective system.
May I say in passing that I was helped in coming to this view by letters from constituents which the hon. Member for Henley and the hon. Member for Bury St. Edmunds (Mr. Griffiths) were good enough to send me last summer from aggrieved constituents who made precisely this point that they had felt secure under the existing bonding system and that it had collapsed under them.
Under the Air Travel Reserve Fund Act we have already made a contribution which covers not only Court Line but also those other air tour operators who failed last season by offering to the fund, which will ensure repayment to Court Line and other holidaymakers, an interest-free loan of up to £15 million. The value of the interest forgone on this loan will depend on how much of this needs to be called up and for how long, and those factors cannot now be adequately judged. But the amount will clearly be substantial. It follows that it is not right to say that all the fund is doing is to pay Court Line holidaymakers out of the pockets of future holidaymakers. In view of these arrangements and the arguments that I have already advanced, we are convinced that it would not be right for the Government to make any further contribution to the fund.
I know that many right hon. and hon. Members wish to speak, so may I say in conclusion something about the conduct of some Opposition spokesmen throughout this sad affair. I do not complain about criticism: a disaster of such magnitude made that inevitable. Nor do I in any way object to Opposition calls for a searching inquiry into the whole of the events and the conduct of the Government. Hon. Members opposite were simply doing their duty in demanding that. But there have been certain aspects of the attack which the House should note.
First, when I set up my inquiry under the Companies Act, an inquiry which, as the inspectors' report reveals, was as thorough and as independent as such reports are, my action was greeted by


the hon. Member for Henley with these words:
It is incredible that the Government should have set up an inquiry to investigate Court Line but should make no attempt to subject their own behaviour to the same independent examination.
As that report makes abundantly clear—I believe for the first time in history, certainly in recent history—two Cabinet Ministers willingly subjected themselves to the cross-examination of the inspectors, and every possible piece of information at their disposal was made available.

Mr. Michael Heseltine: Quite right.

Mr. Shore: The hon. Gentleman says "Right", but it was not right for the hon. Gentleman to make that accusation when he did. The same event was greeted by his hon. Friend the Member for Bury St. Edmunds, when we were setting up an inspectors' inquiry, with these words:
I am not going to call this a whitewash because the whitewash has not yet been applied. But they have prepared the pot and are dipping the brush in it".
Secondly, extract—highly controversial extracts—from the Peat Marwick reports found their way into the hands of the magazine Accountancy Age and were used as they were intended to cast doubt upon the good faith and competence of Ministers in their handling of the Court Line affair. The hon. Member for Henley was chairman of the company that produced this publication for some years although what his connections are with it now I do not know. I am sure that the House will wish to be assured that the hon. Member played no part in what was, to put it mildly, a serious breach of confidence.
Third, with the hon. Member for Henley and the hon. Member for Bury St. Edmunds rivalling each other in an ever-mounting crescendo of abuse, the hon. Member for Bury St. Edmunds won the inglorious prize when he said on 23rd August last year:
This is getting to be like Watergate
with all its associations of conspiracy and of criminal conduct. Finally to keep the pot on the boil, they were at it again this week-end, alleging—not in the House, where such calumnies

can be dealt with, but in the media, where it is difficult to catch them out—that the Parliamentary Commissioner and the inspectors had wilfully and arbitrarily been denied, relevant information in their inquiries, a matter dealt with earlier today. Indeed, the hon. Member for Bury St. Edmunds went so far as to say in his published letter to the Parliamentary Commissioner that the withholding of certain Cabinet Committee documents, which is provided for in the Parliamentary Commissioner Act itself, was "bound to throw doubt" on the validity of his report. The hon. Gentleman will now have received a letter from Sir Alan Marre himself dealing, I think sternly, with that particular point. I believe that fair-minded Members on all sides of the House will recognise smear tactics when they see them. To attack our judgment is one thing; to attack our good faith is another. To cast doubt upon the integrity of independent investigatory bodies like inspectors and the Parliamentary Commissioner can only do harm to confidence in how we handle our affairs in this country and ultimately to the reputation of Parliament itself. I ask the House, and not only my hon. Friends, to support the Government this evening and if in the event the Opposition press the point to a Division, to defeat them decisively.

4.49 p.m.

Mr. Michael Heseltine: I must say I was saddened to hear what the right hon. Gentleman said in the last few minutes of his speech. If I may deal with the personal allegations that he made under the rather choice phraseology of "recognising smear tactics when they see them" perhaps I could clarify one or two personal points. The use of a Companies Act inquiry to investigate the behaviour of Government, I believe, is unprecedented. Never before has it been used to consider the policy and behaviour of Ministers, and I believe that it put upon the inspectors a novel and questionable strain. That was why I thought there were other methods of conducting the inquiry last summer which I would have preferred to see used. I still happen to hold that view, while paying great public tribute to the work of the three inspectors. I still believe that that framework was the wrong way to go about it.


As for my association with Accountancy Age, it is true that I am a major shareholder in the company, as the register of Members' interests will show, and I was its chairman before the 1970 General Election. I have never spoken to the editor, publisher or any member of the staff of that publication, or of the company, about the Court Line affair. The right hon. Gentleman could have discovered that by asking any one of them. The right hon. Gentleman's charge has caused great offence to the editor and staff of the magazine, who, in pursuit of their journalistic profession, unearthed the information themselves. I did not know of its existence until it appeared in Accountancy Age.
I in no way pass judgment upon the journalistic techniques involved; that is a matter for other people. But I greatly resent the making of the charge, first, I think, in another place last week and then here this afternoon by the Secretary of State for Trade. At the end of a very reasonable speech on a difficult matter he sought to embarrass me in a way that gives more credit than I suspect he intended to give to the sort of comments that some of us have seen fit to make about some of his activities. For the record, it would at least be a gesture if the right hon. Gentleman would withdraw the allegations that he made.
The debate calls for comments in three areas—first, the rôle of the management of Court Line; secondly, the rôle of the Government; and, thirdly, the position of the Ombudsman and the consequences of his investigation.
Pages 87 and 137 of the inspectors' report deal by way of summary with the position of the management. The report says that nobody could discover what the financial position or cash flow was. It was
difficult to the point of impossibility".
On page 137, in answer to the question whether Court Line should have approached the Government earlier, it says
'No', in the light of the state of knowledge of Court Line's financial position as existing in the Spring and early Summer of 1974. That state of knowledge was in fact seriously deficient and the responsibility for that must rest with Court Line's Directors".

I support that judgment 100 per cent. I said so at the time of the collapse last year.
I move to the second question—the rôle of the Government. The very thorough documentaion of the two reports makes it clear that the Government Department throughout was well briefed and apprised of the declining position of Court Line. They did not have a responsibility to act in the matter, but the civil servants, by taking simply an intelligent interest in the work that they did, as one would expect, continually unearthed pieces of information or found Press comments which alerted them to the deteriorating situation of Court Line. Therefore, there is no doubt that in the run-up to the events that led to the crucial five days the civil servants fully knew of the company's declining position. There is nothing but praise for their documentation of that declining situation, revealed by the report.
The critical point, as I see it, was on 19th June, when, some 14 days after the National Westminister Bank advised the company to go to the Department of Industry, its representatives turned up at the Department. If I have one criticism which does not emerge from the reports quite as clearly as perhaps it should have done, it is that over that very hectic weekend there does not appear to have been recourse to independent or outside advice to the Government, who, as far as I can see, relied totally on the advice of the directors of Court Line, Court Line's professional advisers or bankers on the one hand and, on the other, their own internal expertise.
It would have been better if the Industrial Development Advisory Board, set up under the Industry Act very much for such a purpose, had been given at least an opportunity to be involved. I do not accept the view that there was not time to involve it. I believe that there was time, albeit not for thorough involvement. But that was not the way in which that weekend was able to be conducted. The board would perhaps have introduced a more abrasive questioning into some of the conversations that took place that weekend.
When he replies to the debate, will the Secretary of State for Energy, who was Secretary of State for Industry at the


time, clarify the situation that arose towards the end of the questions that flowed to him at the time of his first statement? It was to do with the purchase of Court Shipbuilders, which I think he will remember saying was profitable and would prove to be a public asset. About three months later came the end of Court Shipbuilders' financial year. A copy of the accounts of the three companies concerned, which was recently placed in the Library, shows a net loss of £5 million. I should be interested to know whether that relates to the company that the then Secretary of State for Industry thought he was buying as a profitable and viable enterprise, and for which £16 million was considered a reasonable price. I imagine that, if the companies were a great deal less successful than the evidence that weekend indicated, that judgment is one more casualty of the problems that faced the right hon. Gentleman in coming to so rapid a decision.
The inspectors undoubtedly came to the conclusion that when the deal was agreed the rescue was reasonable. But, in the critical period which the Government then faced, the first draft parliamentary statement—produced, I imagine, by civil servants, but presumably carrying with it to the first Cabinet sub-committee supporting documents from the then Secretary of State for Industry—made it clear that the responsibility for the judgments about the holidays was firmly that of the company.
I believe, on the basis of my own ministerial experience, that it is also fair to say that there was prepared by the same civil servants at the same time, or near to that time, a draft supplementary reply which had exactly the same effect as that first draft statement. It added nothing to it. My attitude to the defence which I have heard advanced that the right hon. Gentleman would have used that reply, if he had been asked the supplementary question—as though it were a means of protecting the situation—is that that is a misunderstanding of the way in which the supplementary reply came to be on the files in the first place. My guess is that it was on the files because civil servants had put it there earlier, and that it remained there because it reflected their judgment—the judgment that had led to the preparation of the

first statement, the one that was not made. I do not believe that it is possible to argue that the simple fact of its existence showed that there was an intention to reveal the full situation in the event of a supplementary question giving the opportunity.
We move to the Government's decision—after a discussion, details of which are not made available to us, for reasons with which the House is familiar—on the preparation of a second statement, which, however one tries to describe it, put the Government's opinion behind the judgment about the viability of the holidays.
This is the critical point. I refer to the critical decision which was made by the Cabinet sub-committee and the consequent draft of the Secretary of State for Industry. I assume that the decision to do so was deliberate and conscious. The Secretary of State for Trade said that it was necessary to give to the credibility of Court Line a greater degree of support than was demonstrated in the original draft version. It was a conscious decision. In those circumstances the findings of the two reports must be accepted. After an independent inquiry, they made that point.
The Government decision must have been anguished, with all the holiday-makers spread across the world and the immense difficulties of the time scale within which they had to operate. Not to understand the problems facing the Government would be to deny the realities of ministerial life. We arrive at the point when the Government created confidence which the events did not entitle them to do. It is not right to say that the Government should have introduced the second statement as opposed to the first. What the Government thought the statement meant is not of critical importance. What the holiday-makers thought the statement meant is of critical importance.
On that point the reports are clear. However fine the judgment, however much anguish Ministers must have ex-experienced about the situation, in the end they produced that statement. The only interpretation in the minds of the two groups of inspectors was that the statement gave a credibility to the holidaymakers' judgment which it otherwise would probably not have possessed.


I believe that the Government must accept responsibility for that, as they should have anticipated that point.
The Secretary of State for Trade waxed indignant—as I think he was to some extent entitled to do—about the Court Line management's use of the letter or statement. He must ask himself what he expected the Court Line management to do if it had the authority of the Government behind the judgment about the viability of the holidays. The management was fighting for the survival of the company. I do not wish to defend the situation. However, the Government should have anticipated that their words would be used to reassure people.
When we consider the background against which the Government took this decision, we see that it is clear why the inspectors came to the conclusion that the Government were optimistic. First, according to the figures for the year ended 1973, the Court Line companies had net tangible assets of £13·1 million and borrowings of £41 million. Those figures were available in March 1974. After that, there were the problems of the oil crisis, the three-day working week, and the slumps in the shipping and tourist markets.
The CAA was unable to obtain adequate cash flows. That is referred to in the report. On 31st March 1974 the Observer said that the profits produced by Court Line should have been realistically put at about £60,000 on a turnover of £80 million. The companies' advisers persistently expressed the gravest doubts. The Stock Exchange valuation of Court Line slumped dramatically when it was in the hands of the solicitors and the civil servants. Presumably, there were available to Ministers details from the companies' solicitors and civil servants, according to the inspectors' report, which should have raised questions about the viability, even to the end of 1974, of Court Line.

Mr. Tam Dalyell: Is the hon. Gentleman saying that the Government should have issued no statement, or that a statement should have been issued? If the statement had been any gloomier the Government would have been crucified for bringing the company to the point of liquidation.

Mr. Heseltine: The hon. Gentleman has mentioned the centre of the dilemma facing the Government. Both inspectors' reports deal with this issue. They came to the conclusion that although there must have been a temptation for the Government to issue more optimistic statements than the events justified simply to maintain a degree of confidence, it was not the duty of the Government to issue optimistic statements however politically easier that made the situation for the Government.
We are not dealing with the extremes mentioned by the Secretary of State for Trade. This is a question of drafting. It is no more than that. It is a question of making clear that the judgment about the safety of the holidays was the judgment of the company. The Secretary of State for Industry should have said "I have provided £16 million for this company, on the evidence provided by the company. It is its view that this is sufficient to guarantee the holidays for the remainder of the year. I have had only this weekend to deal with this situation." If the Secretary of State had said that, I do not believe there would have been the panic to which the right hon. Gentleman referred.

Mr. Eric S. Heffer: Does the hon. Gentleman recall the occasion when he was criticised by the Select Committee on Science and Technology? In his defence, he said that he based his view on the evidence and the best information available to him at the time from the officials in his Department. Does he say that the Government are in an entirely different situation from that? Apparently that is a good defence for a past situation but is not applicable to this Government, who now base their position on information from officials—as clearly outlined in both reports, of which there is no criticism—and from the company at that time.

Mr. Heseltine: I remember that incident. I made the statement which caused the question to be raised. I explained the matter and revealed the full facts to the Select Committee. It was suggested that the words I used were misleading. I did not like the idea that I had misled the House of Commons. Having discussed the matter with my Front Bench colleagues, I was persuaded that there was only one honourable course


in the circumstances, which was to apologise. I did so at the earliest possible parliamentary opportunity. I believed that that was the only course to take.
In these circumstances, in view of the interpretations placed by those inspectors on the speech which the Secretary of State for Industry made in the House, the apology course should be adopted.

Mr. Heffer: You had to admit that.

Mr. Heseltine: I did not have to admit anything. I found myself in a position in which an independent verdict gave one view. As that was the view of a Select Committee, I accepted it. In this case, two independent verdicts have given a similar unqualified judgment. In those circumstances, it would be in the interests of the Secretary of State for Industry and of the other parties concerned to accept those judgments. When he replies the Minister should say something along the lines of my remarks, which were made in similar circumstances.
In reply to the point made by the Secretary of State for Trade, I ask: what do we do now? There is a remedy available to the Government through the Air Travel Reserve Fund Act, which sets up a fund to ensure that holidaymakers get back their money in the event of the failure of a tour operator. I accept that the whole of the £15 million is not designed for that purpose, but a substantial part of it is.
In the light of what the Secretary of State for Trade seemed to be saying in Committee and what the Ombudsman said in his final paragraph, there can be no objection to making that loan a charge to public funds generally and not a charge to be repaid by future holidaymakers. That would be the elementary recourse demanded by these two independent inquiries.
The overwhelming judgment of the two inquiries has been accepted by the commentators who have examined the reports. Every editorial I have read has supported the judgment of those two inquiries, and has called upon the Secretary of State for Energy to apologise to the House. I ask him to consider doing just that because for him to fail to do so would put the Ombudsman in a prejudiced position.
When Richard Crossman moved the Second Reading of the Parliamentary

Commissioner Bill, he told the House that the lowest clerk and the highest in the land would be subject to inquiry by the Ombudsman. It would be a great disservice to that institution if it should be found that in future the lowest in the land were compelled to accept the findings of the Ombudsman but when, for the first time, the highest in the land were subjected to his inquiry and the findings went against them, they rejected his findings out of hand.

Several Hon. Members: Several Hon. Members rose—

Mr. Deputy Speaker (Mr. George Thomas): I remind the House that we have one hour eight minutes left for back benchers.

5.12 p.m.

Mr. Ivor Clemitson: When my right hon. Friend the Secretary of State for Trade made his statement about Court Line last week, I waited in vain for any sign from the Opposition either of criticism of the erstwhile directors of Court Line, or of sympathy with the plight of the 1,200 people who used to work for Court Line but who have lost their jobs in the collapse.

Mr. Anthony Fell: On a point of order, Mr. Deputy Speaker. You have just said that only one hour eight minutes are left for back benchers. Will you make an appeal through your channels to Front Bench speakers to take less time so that the back bench speakers may have more time? I am not myself asking to speak.

Mr. William Whitelaw: Further to that point of order, Mr. Deputy Speaker. The right hon. Gentleman the Secretary of State for Energy has asked me for about 30 minutes. As he is defending himself, I think it proper that the House should support that request, with which I agree. I intend, if possible, to wind up in 10 minutes, which, is a much shorter time than is normal. If I overrun by a minute or two, I am sure that the right hon. Gentleman will understand. I want to give the right hon. Gentleman that amount of time and I think it right that a Minister who is defending himself should be allowed that amount of time.

Mr. Deputy Speaker: I am much obliged to the right hon. Gentleman. My


appeal is to hon. Members who are called to be as brief as possible.

Mr. Clemitson: I was in danger of doing the hon. Member for Henley (Mr. Heseltine) an injustice. He devoted two sentences to the responsibility of the Court Line directors. The rule appears to be that if the directors of a privately-owned company get into trouble, we must look for someone else to blame, preferably the Government, I remind the hon. Gentleman of his immediate reaction to the first of the two statements last year, which was to blame the Chancellor of the Exchequer in particular for his Budget and the Government in general for their plans to nationalise the shipbuilding industry.
The central figure in the hon. Gentleman's demonology reigning over the lowest level of the nether regions is my right hon. Friend the former Secretary of State for Industry. Fuel is now added to those flames by the Ombudsman's report. After many "ifs" and "buts" and qualifications, the Ombudsman came to the conclusion that:
insufficient regard was paid in the statement to the principle that undue confidence should not be created or maintained.
I do not wish to comment on whether that conclusion is justified, because my right hon. Friends are perfectly capable of justifying themselves and it would be improper for me to attempt to justify them. [HON. MEMBERS: "Why?"] Because, as I shall attempt to show, the matter is one of supreme insignificance.
The terms of reference of the Ombudsman were extremely narrow. I make no complaint against the Parliamentary Commissioner on that score. His powers are circumscribed by statute and the subject he was asked to investigate was extremely narrow. I venture to suggest that if he had been in a position to ask the real question, which is who was responsible for the collapse of Court Line and, as a result, the loss of holidays and the loss of jobs, he must have concluded that any fault on the part of the Government and of my right hon. Friend, if fault there be, pales into the minutest insignificance compared with the responsibility resting on the shoulders of the directors of the company.
The introduction to the interim report of the inspectors appointed by the Department of Trade states that the investiga-

tion was much broader than that of the Parliamentary Commissioner. But we must remember that the report of the inspectors is concerned only with the last five months of Court Line's existence and is addressed to whether there was fraudulent trading on the part of Court Line and not whether there was managerial incompetence or irresponsibility. Yet who can read that report without concluding that it was the sheer incompetence, maladministration and irresponsibility of those Court Line directors that caused the collapse of the company?
The report reads like the story of a compulsive gambler. The deeper he gets into debt, the higher the stakes he puts on the table. The company acquired Clark-sons in 1973, with its "chaotic records". Within a few months before the collapse it acquired Horizon, an acquisition—
that was not right and was not beneficial.
The inspectors based their opinion upon—
the plain, undoubted and seriously disrupting fact that Horizon's financial records were—and were known to be—in a chaotic state.
If I may misquote Oscar Wilde, to acquire one company with chaotic books may be considered a misfortune, but to acquire two looks like downright carelessness.
Then there followed the "Dick Van Dyke Show" with the acquisition of a 10 per cent. stake in an oil and gas consortium. There was always money available to acquire these companies. There was always the National Westminster, Williams and Glyn's and Barclays, who contributed not inconsiderable sums of money to Court Line in the early months of 1974. Incidentally, if the Government are to be criticised for acting on inadequate financial information, what about these paragons of financial virtue, the banks, the people who are such experts in the ways of business?
The holiday side of the business was a house of cards, based on virtually no assets and vulnerable to the merest puff of wind that came along. What must we think, for example, of a company in which two-thirds of the supposed capital and reserves was goodwill? On that basis it borrowed over £40 million, breaking its own articles by grossly exceeding its maximum borrowing requirement. At the company's annual general meeting,


instead of admitting that the rules had been broken, the chairman said:
The board has for some time been conscious that the level of group borrowings is high, particularly in the light of changes in the general economic climate that have taken place in this country and overseas in the last six months.
There was not a word about the breaking of the rules.
Talking of statements conveying an over-optimistic picture, there is the rest of the chairman's statement. I forbear from quoting any more from it. As the inspector's report rightly says,
It is not only hindsight that reminds one that the group of which the chairman was speaking in mid-March 1974 was on 15th August 1974 forced to go out of business, with no new factual circumstances of any significance or consequence intervening.
The directors clearly knew that the business was in a mess before the AGM. We are told:
consideration was actually given to the question of rewriting the accounts and as to whether the recommended dividend should in fact not be paid.
The report continues:
it was decided for many reasons—including the question of public confidence—not to take either of those steps.
Here was a company in terrible financial straits, yet so strong was its sense of duty, and so little did it want to shatter the confidence of the public, that it paid out another £586,000 to add to the £501,000 of the interim dividend to make a grand total dividend for the year of £1,087,000. This was a company owing over £40 million on the strength of £6 million of capital and resources. Of course, £30,000 of the dividends was added to the £260,000 emoluments of the directors, which on my calculations brings the average take for the year for 15 directors to very nearly £20,000, and the take of the managing director to not far short of £50,000.

Mr. Antony Buck: rose—

Mr. Clemitson: No, I shall not give way. I know that many Members wish to take part in the debate.
No wonder in 1973 the group could afford to contribute only a meagre £275 to the Conservative Party. I forbear to mention the non-monetary advantages.

I shall not bore the House further with this sad tale of incompetence, except to note that in the last few months of its life—I now go back to what the hon. Member for Henley said about the shipbuilding division—£8 million was milked from the shipbuilding division for the leisure division. Of that sum £4 million found its way to the sunnier climes of the Caribbean and formed part of the £15 million owed by the Caribbean interests to the rest of the group.
On its last knees, the company went to the Government, as privately-owned companies are wont to do when in trouble. From the findings of the inspectors it is clear that, save for the small point of the statements made in the House, the Government's actions have been fully justified.
It might be thought that I am being a little harsh on the directors of Court Line. If that is so, let me say that 1,200 people lost their jobs. They were people who had a greater loyalty to their company than any other group of people I have ever met. Many of those people happen to be my constituents. Luton Airport happens to be in my constituency. They lost their jobs and their money. The report reads:
Many employees of Court Line were left upon its collapse in an unfortunate situation in that they were owed wages considerably in excess of the present preferential claim limit of £200 contained in the Companies Act 1948. Further, many such employees had properly incurred expenses which were due to be repaid to them and which are not covered by the Act at all.
The sufferings and the misfortunes of many people, including holiday makers and ex-employees of Court Line, have been cruelly and contemptuously exploited by Conservative Members. They have strained at the gnat of the Government's statements and yet have swallowed the camel of the incompetence and irresponsibility of the Court Line directors without so much as a hiccup.

5.17 p.m.

Mr. Charles Fletcher-Cooke: It is very rare that a Government reject the findings of the Parliamentary Commissioner. Of the many thousands of reports that he makes—and many of them are quite unknown to the general public—I can think of only half a dozen over the whole period of his institution that the Government have completely rejected.


It is even rarer that the Government reject such a report before the Select Committee set up by the House to examine the reports has had a chance to do so. I can only recollect one other such case—namely, the inquiry into the Sachsenhausen Camp case. However, let me remind the Government that in the end, and after the Select Committee had finally had its go, the Government paid up.
Why should the Select Committee's work be made so difficult by Government acting in this precipitous way? This matter was examined by Sir William Armstrong, as he then was, the head of the Civil Service, after the Sachsenhausen case. I shall quote a few sentences from the definitive work on the Parliamentary Ombudsman by Mr. Roy Gregory who wrote:
Sachsenhausen, Sir William reiterated, was a special case, in that after the Minister had spoken in the House, it would have been very difficult for civil servants to say any more about it before the Select Committee…. What complicated the issue, he emphasised, was the intervention of the Minister…
Suppose a Minister totally rejected a report from the Commissioner, he was asked, would not the Committee be expected to advise the House in some way? How could they do that without conducting the kind of investigation which they had been discussing? A situation of that kind, Sir William agreed, would indeed put the Committee in very great difficulty. He could only hope that the Commissioner's reports would not be made the subject of Ministerial action until they had been taken by the Committee.
Those are the words of somebody who grew up with the whole institution of the Ombudsman and who saw the dangers of the Government precipitately rejecting a report which they disliked, which could thereby nullify all the work that had been done by the Committee.
There is not only the difficulty that the civil servants will close up, as they are obliged to do, once the Minister has spoken. There are also appalling difficulties in that Ministers put their own supporters on the Committee when we come to do our work. Their loyalties will be completely divided if their leaders have said one thing before we have been able to exercise what is a judicial judgment. Therefore, I protest not just in an empty constitutional way, but because there is a real issue involved, and one in which Ministers, curiously enough, have done themselves an injustice.

This is not merely an academic matter. There is a suggestion in the inspectors' report that the full horror of the crime of slackness of accounting was not sufficiently brought to the attention of Ministers at the time.
We have had an interesting account of the full horror of the Court Line management from the hon. Member for Luton, East (Mr. Clemitson). It seems to me that the Government in that weekend should have been warned rather more closely about the matter than they were. If we as a Select Committee had been allowed to examine the officials, as we do on occasions, it might be that the Ministers would have found that their blame would not have been as great as now appears. I am only guessing on that point and I am not attempting to prejudge the matter.
I call attention to the statement on page 148 of the inspectors' report which says that Mr. Sayer's opinion on that occasion
was not reported back to the Ministers.
The Government, by their precipitate action in cutting us off from our usual work, may have prevented a possible defence. It may be that in breaking the Armstrong rules the Government have become hoist with their own petard and have done themselves an injustice.
On the general issue—and I promise that I shall be brief—it must be admitted that a sharp knock has been delivered to the whole office and position of the Parliamentary Commissioner. He and his predecessor have built up a quiet but important body of law, and indeed of case law, in this matter. Their reputation for fearless inquiry and exposure of maladministration, delay and all the other evils for which the Government may be responsible has been growing in recognition, even though it has not had the publicity given to showier elements. It is inevitable that when the light of publicity is focused on him, as it is today—and it is an occasion when Ministers have criticised and rejected his report—it must mean that confidence in the Commissioner's position is undermined.
To my mind this is an occasion not so much for anger as for sorrow. My sorrow is that this is all in aid of so very little. If the Ombudsman had found gross


negligence, some collateral motives, or some real wickedness in ministerial behaviour, one could have understood why it should perhaps have been rejected in this summary way.
But now for what? It is rejected for a difference of opinion about emphasis, on the nuance or meaning of words. I put the rhetorical question: is it for reasons of amour propre; is it for the money; or for what? Why should it be rejected when it is a matter of opinion as to what some people might have taken words to mean and other people do not? I feel that the prize, if it can be so termed, that the Government will gain from this rejection is so tiny compared with the damage they are doing to the institution, that it is a matter for tears rather than for anger.

5.35 p.m.

Mr. Richard Wainwright: The combative speech with which the Secretary of State for Trade opened the debate seems to me to reflect an error which from the beginning has dogged the Government in their dealings with this uphappy episode. They have paid too much attention to the likely political reactions of what they have done and said, but far too little attention to the likely attitude of the ordinary citizen who was counting on Court Line for various holiday services. There was too much concern in the Secretary of State's speech about the highly predictable reactions of the hon. Member for Bury St. Edmunds (Mr. Griffiths), at the expense of studying the probable attitude of members of the public.
I base myself on the verdict on the matter arrived at by the three distinguished inspectors who faced this problem by entitling one section of their report "The So-called Dilemma". In the course of that short chapter in paragraph 171 they say:
It was sought to be impressed on us by some witnesses that if a company though expressing confidence sounded a note of caution or reservation as well the latter would swamp the former and completely undermine the message of confidence. This we cannot accept. In our view the public respond sensibly and fairly to what is said to them in announcements to them. A fair sense can be conveyed by fair language.
On that basis it seems to me that Ministers should have realised from the

beginning that in dealing with an undertaking whose accounting was wholly faulty at all levels, and not just in one section of book-keeping, they should have adopted an agnostic attitude to the possible outcome of the leisure division's activities. It has also been made clear that at the level of balance sheet accounting the company was under severe criticism in the 1973 accounts.
On the very important matter of inter-company indebtedness in the group, the company was completely haywire. Court Line told the inspectors that it thought its inter-company indebtedness was about £6·34 million, the inspectors could trace an inter-company indebtedness of £7·2 million, and the bank said that it was £8 million. In the event, a total of £9 million was swallowed up out of the Government's £16 million in clearing off indebtedness to the shipbuilding division. On that extremely quaky basis, the Ministers should never have consented to get mixed up with the forecasts about the outcome of the leisure division's activities and should have remained agnostic about it. I believe this could have been done without seriously undermining public confidence in the holiday services.
In the basic matters of ordinary day-to-day records in the leisure division, the inspectors say that they were abundantly satisfied that these records were
…in an appalling stat—a state which defied any speedy remedy and which made everybody's task of finding out the financial position and the cash flow difficult to the point of impossibility.
In that situation statements should not be made suggesting that the information is there and that there were only slight difficulties in the way of Ministers knowing what was going on. Judging by the narrative of the inspectors' report, I cannot help feeling that these very important considerations were submerged in an atmosphere of unjustified optimism.
The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) rightly drew attention to the action by Mr. Sayers at the meeting of 23rd June, namely, that it should be clearly understood that Court Line was not in a position to guarantee the position so as to enable the leisure division to continue throughout the summer season.


The inspectors say that this timely warning appeared to have been submerged in a general atmosphere of optimism during that afternoon.
I feel that the summary rejection of the Ombudsman's conclusions, supported word for word in the report of the three distinguished inspectors, should not have been dismissed by the Government in that way—partly, and perhaps most importantly, for the reasons given very clearly by the Chairman of our Select Committee, but also because of the damage done to a growing public confidence in the Ombudsman among ordinary citizens who were beginning to understand that at last they had an ally against bureaucracy and possible ministerial misjudgments—misjudgments to which all human beings are prone. They now find that this great authority has had its findings rejected in a single sentence and without any argument as to statements made in the House. That is a disservice to an office which on its creation received a great welcome from all parts of the House. In these circumstances, my right hon. and hon. Friends and I believe—

Mr. Shore: I must put it to the hon. Gentleman that no disservice or damage is done to the office of the Parliamentary Commissioner when a Government disagree with the verdict. Damage would be done to the Ombudsman if attacks were made upon his own judgment, fairness and reliability in going into all the evidence. There have been occasions in the past—not a large number—when Governments have disagreed with Ombudsmen.

Mr. Wainwright: The burden of my case is that the findings of the Ombudsman, supported by the unanimous verdict of three distinguished professional inspectors who covered the same ground, were dismissed in one sentence in the Secretary of State's statement to us the other day. This is the sort of thing that will damage public confidence, and the intervention we have just had makes it necessary for me to speak for a minute or two longer.
The public will conclude that other Ombudsmen—dealing, as they have to do, with complaints arising from the National Health Service, complaints against town halls, and so on—are likely to have their

findings similarly dismissed in such a cursory fashion. The public will form the view that it is a lot of eyewash. I do not believe that it is eyewash, but that will be the impression given by the summary way in which the Government chose to treat the Ombudsman's findings. I hope, therefore, that there will be some recantation this afternoon.
I believe that Sir Alan Marre's findings should have been accepted on the basis that they were the comments of a disinterested person, supported by three other disinterested people, and quarrelled with by people who cannot deny that they are extremely interested.
In those circumstances, every convention of life in this country dictates that those who are interested parties should bow gracefully, decently and honourably to the conclusions formed by the disinterested investigators. It would follow from that that the Government should contribute handsomely to the compensation fund.

5.43 p.m.

Mr. Michael Stewart: I was glad that my hon. Friend the Member for Luton, East (Mr. Clemitson) reminded us that the most important aspect of the Court Line affair is the object lesson it gives us in the appalling mismanagement of which private enterprise is capable, and the injury consequently done to many holidaymakers and many employees. But the matter we are now discussing—that of the Government statement and its relation to the report of the Ombudsman and the commissioners—although of lesser importance, is by no means an unimportant matter, and it is that to which I want to address my remarks.
May I dispose of a matter that I hope nobody will have the face to raise after the Prime Minister's statement earlier today—that of the Cabinet document. It is quite clear, to anyone who knows the Parliamentary Commissioner Act, that in not giving the Ombudsman a sight of that document the Government were doing not only what the law allows but what the law requires. The only relevance of the document was that it could establish that the decision was not that of a single Minister but of the Government as a whole, but the Government have never denied that at all and never


attempted to conceal it. This whole business, therefore, was a red herring, born in some cases of ignorance and in some cases of malice.
But, setting that aside, and turning now to the question of rejecting an Ombudsman's report, this is not unheard of. Indeed, there have not only been rejections of particular reports but cases in which successive Governments have repeatedly refused to make alterations in procedures which the Ombudsman and the Select Committee considered just. We are encouraged by the fact that progressively over the years Governments have tended to move a little nearer to the position that we are urging on them.
I do not see how any Government could be expected to say in advance, "We will accept the Ombudsman's judgment." That was never in the mind of the House when the Act was passed. In some cases an Ombudsman may make a judgment which would require a Government to pay out money. Quite frequently Governments make ex-gratia payments and so on as a result of decisions of Ombudsmen, but no Government could say in advance, "We give to the Ombudsman the power to decide whether we should pay out or not." We do not give a power like that to Select Committees appointed by the House. We never say that we will accept in advance whatever its report may be.
It is important that this should be clear. A refusal to accept an Ombudsman's report is not in itself, as has been suggested in some quarters, a kind of high crime and misdemeanor against the constitution. But it is also quite right to point out that not to accept an Ombudsman's report in a major matter is an extremely serious thing to do. It is not something to be done lightly.
Here I take up the point made by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). What is the Government's attitude as to how reports of this seriousness from the Ombudsman ought to be treated? In this case not only did the Government pronounce their judgment before the Select Committee had had an opportunity to consider the report. They pronounced their judgment on the report, which is a report to Parliament, before Parliament had even seen

the report. There may have been reasons in this particular case why that was unavoidable, but I trust that we shall have an answer before the end of the debate as to how the Government see this problem for the future.
It seems to me that Governments ought not to express their judgment on the Ombudsman's report before Parliament has even seen that report. I think it would generally be a good thing—I am not quite so certain of this—if the Select Committee had a go at the matter before the Government committed themselves, but we may hear the Government's view on this matter.
What is the verdict of the Ombudsman? We all saw the hon. Member for Henley (Mr. Heseltine) in a decidedly chastened mood today. He usually models himself on Sergeant Buzfuz, and the attempt to model himself on Uriah Heep, although salutary, was not as attractive as his usual robustness. But, of course, he had to do it, because the suggestion, wildly made all round, that the Government had been tearing up the constitution, deceiving the House and deceiving the country, will not stand up for one moment in the face of either the investigators' report or the Ombudsman's report.
The Ombudsman makes it quite clear that the Government acted in good faith, with speed and with a sense of responsibility. The charge that is made—and it is to this that we must address ourselves—is that the degree of confidence that the Government expressed about Court Line clients' holidays was not sufficiently qualified. On that matter I ask my right hon. Friend in his reply to address his mind particularly to paragraph 86 of the Ombudsman's report. That quotes, I think not unfairly, certain phrases used by my right hon. Friend. It says:
The statement of 26 June referred to the Government's view that the proposals should 'stabilise' the holiday situation
Later in the paragraph it says that
in answer to questions he said that it 'was thought right that holidaymakers…this summer should have some reasonable security, and the Government were anxious to help them', that the proposed purchase of the shipbuilding and related interests made 'possible…safeguarding the holidaymakers', and that the statement was a holding statement 'designed mainly to reassure…holidaymakers'.


The Ombudsman's comments on those phrases is:
It seems to me that all these references would naturally and reasonably have been understood as meaning that holidaymakers could, in the Government's view, safely go ahead with their holiday plans for 1974.
I find it difficult to contest that argument, and the Government in their reply must address themselves to that.
I know—this is brought out very clearly in the Ombudsman's report—that there was a very weighty reason why the Government should not tilt too far in the other direction and express less confidence than the facts might have warranted. The fact is that in that case Court Line probably would have folded up and that a great many more holidaymakers would have suffered. The Ombudsman does not dispute this. He points out, correctly from his point of view, that he is not called upon to deal with the grievances of people who suffer as a result of the incompetence of private enterprise, but that he is called upon to deal with the grievances of people who suffer through errors of Ministers or civil servants.
What is the argument, then? I think that the Government are saying that there was a very weighty reason of State—a reason of policy—for expressing rather more confidence in the chances of the holidaymakers than a strict, austere judgment of the facts would have warranted. I ask right hon. and hon. Members to notice that the Government were not attempting to get any party advantage for themselves or to conceal any facts discreditable to themselves. The people whose interests they were concerned for were the holidaymakers.
I say that it was an important reason of State. Let us consider this. There is no doubt that this will not be the last time when a Government have to go to the help of decrepit private enterprise and when, in consequence, Ministers have to make statements about the possible commercial futures of companies. What worries me is that when in future the public read such statements made by Ministers, will they say to themselves, "Yes, but we must allow for the fact that the Minister, for quite admirable reasons and with the best of intentions, is bound to be expressing a more optimistic view than the facts warrant"? Does not this

present a permanent long-term problem to Governments?
It is to that that I hope my right hon. Friend the Secretary of State for Energy will address himself when he replies to the debate.

5.53 p.m.

Mr. Eldon Griffiths: Out of a desire to be brief, I shall confine myself to three simple questions.
The first is whether the statement made by the then Secretary of State for Industry led holidaymakers to believe that they could safely maintain their reservations with Court Line or, indeed, make new reservations, on the basis of what he said. The answer to that question cannot be disputed.
I have some 1,200 letters from our fellow citizens in every part of the country which make it clear beyond doubt that when their writers heard through the media the reports of the statement of the Secretary of State they paid over money which they would not have paid over otherwise.
I shall not weary the House with the massive documentation that I have. I simply quote two examples taken entirely at random.
The first letter is from a Mr. N. W. Brodie, of Wilmslow in Cheshire. He writes:
It was only after hearing Mr. Benn's assurances on television that our holidays would be secure as a result of his action in taking over the ship buildings activities that I paid my balance of £340. Actually, it was paid the day after his television broadcast Certainly I would not have paid this money over had it not been for Mr. Benn's assurances.
The second entirely typical and random example is from a Mrs. Eewrel, of Stage-lands in Crawley. She writes:
My husband booked a holiday in Greece for four people…costing £460. We held the money up until Mr. Benn gave out his statement that all holidays would be safe. We then paid our money over.
My first question, therefore, is whether the right hon. Gentleman's statement led people to pay over money which otherwise they would not have paid. I think that the incontestable answer to that question is, "Yes." Let me quote the Daily Mirror. The main news item on the


front page on the day after the right hon. Gentleman spoke was:
A black cloud hanging over the sunshine holiday plans of 400,000 Britons was swept away yesterday by Industry Secretary Anthony Wedgwood Benn.
The item went on to quote a spokesman for the company as saying:
Any holidaymakers who have doubts about their future holiday can rest assured that all will be well.
—the implication being because of the Government's action.
My second question concerns where the responsibility lies. It being the fact that hundreds of thousands of people lost their money as a result of this statement, to what extent can we hold the right hon. Gentleman accountable? Should he have included in his statement sufficient reservation or qualification to alert the travelling public to what we now know and he then had reason to suspect was the true position of the company?
The Ombudsman at least is quite clear about this. In paragraph 84 he says:
…it seems to me to be an important principle…that undue confidence should not be created or maintained.
He says in paragraph 87:
…the statements suggested confidence without any qualification…they went somewhat further than the circumstances warranted…the statements were liable to leave a misleading impression with the public.
Those are not my judgments. Those are the judgments of Sir Alan Marre, the high official appointed by this House to try these matters. I hope that it will not go out from this House that we have no confidence in the judgments that Sir Alan Marre has reached on this matter. They are powerful indictments, and they lead to a specific conclusion. Sir Alan says in paragraphs 91 and 92, about a suitable qualification:
…the case for its inclusion…was the need to give persons who were deciding whether to spend their own money on holiday arrangements a balanced enough assessment of the situation on which to base their decisions.
Because that was not done, because that qualification was not provided, tens of thousands of people lost their holidays, scores of thousands of people lost money and, because of this, the Ombudsman reached the verdict:
…the Government cannot be absolved of all responsibility…

That brings me to my final question. Who within the Government must bear the responsibility? Is it the civil servants? I believe that a careful study of the two reports will indicate that they recommended qualification. Is it the Secretary of State for Industry, as he then was? I believe that he bears a very great degree of responsibility. But I do not think that he bears it alone. The Secretary of State for Trade shares his responsibility. I say that for this reason. Any reading of the report of his own inspectors and of the report of the Ombudsman indicates a pattern of events over a period of some nine to 12 months where officials of his Department and indeed of the Department of Industry were giving advance warnings of the company's difficulties.
Again, I shall not weary the House by documenting this. I hope that it will be accepted—[Interruption.] If hon. Members wish me to do so, I can, of course, do so. There is ample evidence to show that the storm signals had been given to the Secretary of State for Trade over a long period of time. They continued after the statement of the Secretary of State for Industry.
Thus on 31st July, after the statement by the Secretary of State for Industry, the Under-Secretary advised the Prime Minister that Court Line was continuing to experience serious problems in its holiday activities. On 1st August, Messrs. Peat, Marwick, Mitchell & Co. concluded that the continuation of Court Line's leisure activities was not a viable proposition. On 5th August, Ministers were informed that a very serious situation was developing. On 9th August the Under-Secretary sent a further minute to the Prime Minister showing that Court Line would inevitably go into liquidation the following week.
During this period of 10 or 12 days after the second statement by the Secretary of State for Industry, the Secretary of State for Trade and his colleague had evidence that the situation was deteriorating rapidly. Why did they not inform travel agents and this House, which was still sitting? Why did they not admit that the original statement had over-egged the pudding and that the Secretary of State for Industry had given assurances which the new information available to the Department of Trade could not sustain?

The Under-Secretary of State for Trade (Mr. Clinton Davis): The hon. Gentleman should do the House the courtesy of looking at the reports and what they have to say in this respect. Is he suggesting that the Government should have taken earlier action to make sure that the collapse occurred before 15th August?

Mr. Griffiths: I am saying that there is incontestible evidence that many travel agents continued to take new bookings and more money from the public during the period when it was known to the Secretary of State for Trade that the company could not sustain those bookings. The Department of Trade failed to alert the public to the fact, of which the Secretary of State had knowledge, that they were putting their money into a company that was doomed to bankruptcy. The Department allowed the public to go on booking holidays.
My complaint is of double standards. If the directors of any private company had given assurances similar to those given by the Secretary of State for Industry which shortly afterwards turned out to be ill-founded, they might well have been under a legal obligation to disclose their error of judgment in order to save the public from making a bad investment on that account. That is company law as far as private businesses are concerned.

Mr. Keith Stainton: Will that not now apply?

Mr. Griffiths: I very much hope that it will apply, but apparently it will not apply to members of the Government. Equally, if the director of a private firm came into possession of information which showed that a company with which he was associated was incapable of carrying out its contracts, he would be bound to try to avoid allowing the public to put more money into that firm. The Secretary of State did not do that. He is in a different position from a company director, but there is one thing he should do: he should accept the independent verdict of the Ombudsman.

Mr. Shore: I suggest that there is one thing the hon. Gentleman should do. He should read again the inspectors' report which deals with precisely the points he has made and every one of them.

Mr. Griffiths: I undertook that I would be brief and it would be a misuse of time to argue across the Floor of the House with the Secretary of State, as I could do, on this point. I say only this: it is one of the good conventions of this House and this country that, when an independent body is asked to investigate a matter and reaches a conclusion on the facts, we accept the judgment and abide by it. It is a sad day for Parliament and the country that two Ministers who have been found guilty by such an impartial body do not have the guts to admit it.

6.6 p.m.

Mr. Eric S. Heffer: I shall be very brief indeed. I must point out to the hon. Member for Bury St. Edmunds (Mr. Griffiths) that on 25th July 1972, his hon. Friend the Member for St. Ives (Mr. Nott), who was a member of the Government, said:
I do not think there can be any doubt, however, that it was never intended, when the Parliamentary Commissioner for Administration Bill was debated, that in the last analysis the judgment of the Parliamentary Commissioner should be substituted for that of the Ministers responsible. This implies there may be occasional—I emphasise occasional—cases where they do not feel able to accept the remedy he proposes."—[Official Report, 25th July 1972; Vol. 841, c. 1788.]
Governments in the past have not always accepted reports of the Parliamentary Commissioner if they have felt unable to do so.
I was in the Government at the time of the Court Line collapse and I know that the hon. Member for Bury St. Edmunds has been a Minister. He must know what the Government faced in the dreadful situation where thousands of workers could have been thrown out of work and confidence in the future of the travel side was involved. This was an appalling situation for the Government to find itself in. If the Government had taken no action, hon. Members opposite would have kicked up the biggest row possible and said that the Government were failing in their obligations to workers in the industry and to holidaymakers. It is a "Have you stopped beating your wife?" situation. If you answer "Yes", that means that you have beaten your wife in the past and if you reply "No", that means that you are still beating her. In fact you may never have beaten your wife at all.


That was the situation into which the hon. Member for Henley (Mr. Heseltine) was trying to put the Government It was interesting to hear his speech today. He was very moderate. He has had to retreat from the position of recent public statements. He is much fiercer outside the House because he knows that inside the House he could not sustain the sort of rubbish he puts forward. I remember him saying that we wanted Court Line to collapse so that we could nationalise it. That is the sort of nonsense we get from him.
We have been asked to accept the judgment of Sir Alan Marre. I make no bones about it: I think that he has gone beyond his remit. The terms of his remit, as issued by his own office, are:
The function of the PCA is to investigate complaints referred to him by Members of Parliament from members of the public who claim to have sustained injustice in consequence of maladministration".
No one has claimed that there has been any maladministration. This is a political judgment, and I did not think that the Ombudsman entered into high politics or made political judgments. That is the issue at stake in our discussions. I say that he has gone beyond his remit and that the Government are entitled, as the previous Conservative Government were entitled, to say that there are occasions when they are not prepared to accept a certain position.

Mr. Heseltine: The hon. Member may be entitled to make that point about the Ombudsman in respect of an inquiry instigated by back-benchers. Does he take the same view about the inquiry which was set up by his right hon. Friends, which was given a very wide remit and which came to precisely the same conclusion?

Mr. Heffer: I do not understand the situation of the two inquiries in the sense that it is said that in their inquiry the three inspectors kept in close contact with the Ombudsman. The comments in the two reports about my right hon. Friend's statement are in almost identical wording. I am not suggesting that there was any collusion by the inspectors and the Ombudsman. Hon. Members can draw their own conclusions about that. I am saying only that this was a matter of poli-

tical judgment. It had nothing whatever to do with the fact that the Government took the right decisions. If the Government had not acted in the way they did, Court Line would have collapsed that much sooner and thousands more people would have found themselves stranded on holiday and in an impossible position.

6.12 p.m.

Mr. Michael Hamilton: The House will be grateful to you, Mr. Deputy Speaker, that in this brief debate you have called both the Chairman and the former Chairman of the Select Committee on the Parliamentary Commissioner. Both of them made very valuable contributions. What puzzles me about this whole business is that in these extraordinary difficult days one would think that the Government would welcome all the friends they can muster. I concede that all Governments need their share of good luck.
I appreciate that this is the season when Ministers are under strain, yet repeatedly we have seen in this Chamber the taking of imperfect decisions and the exercising of imperfect judgment. Within the last 48 hours we have seen this long-suffering House unable to bring itself to support some Government measure or other. That was because of sheer lack of foresight and management. Here again this evening we are concerned with what is quite clearly a blunder.
We can all think of things which might be said about the Prime Minister, and I was grateful that he should have been present in the early stages of the debate. Everyone will accept that it can be said of the right hon. Gentleman that he is very deft in his footwork. I believe, and I am delighted to pay him this compliment, that if he had not been out of the country at the critical moment we should not now be holding this debate.
I am not worried so much about Court Line, although victims of the crash are among my constituents. I am not so worried about the lost holidays or about the misleading of our constituents. What troubles me about all this is the injury done to Parliament. The Parliamentary Commissioner's criticism is very slight, and many of us would think that it was too slight. Yet even this gentle criticism is rejected by the Government. What is the point of back benchers on both sides


of the House assembling evidence, setting out complex issues and laying it before the Parliamentary Commissioner in Great Smith Street if they feel that at the end of the day whatever the Parliamentary Commissioner is likely to say will be disregarded by the Government?
What is the point of this House setting up a Select Committee, a committee of very senior and experienced Members, to which the Parliamentary Commissioner reports if that is the sort of treatment given by the Government to the Commissioner's findings? We should ask what the House had in mind when it set up the Parliamentary Commissioner. Was it our intention that Governments should ride roughshod over his findings? I have been a Member of this House just long enough to appreciate that whatever may be said in debate there is certain common ground between back benchers across the Floor of the House. I believe that many would agree with me that when the Government ride roughshod across the Parliamentary Commissioner it is the back bencher's position which is weakened. The ally of the back bencher is worsened, and in this Court Line case the Government have shot the back benchers' fox.
My criticism of the Parliamentary Commissioner is that on a delicate issue of balance he tends to give the benefit of the doubt to the Government of the day. A consequence of that is that when he criticises the Government that criticism is roundly deserved, and that is the case in the Court Line business. I agree with my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) that this is a rather sad day for Parliament. It is a sad day for the back bencher and, therefore, for those whom he represents. I regret the Government's conduct.
It is not difficult for any of us to imagine what Sir Alan Marre's thoughts towards the Government must be at this moment of time, but I do not believe that he will be despondent for very long. In his office in Great Smith Street he has on the wall a great gallery picture from which I am sure he will draw comfort. It is a picture of Belshazzar, his rulers, his princes, his full administration and his secretaries of state. There is the writing on the plaster of the palace wall. It says:

Thou art weighed in the balances, and art found wanting.
It forecasts certain downfall of the administration. Whatever else, I think we can agree that Sir Alan Marre has good taste in pictures.

Mr. Deputy Speaker: Before I call the hon. Member for Luton, West (Mr. Sedgemore), I must remind him that the winding-up speeches are due to start in just a few minutes.

6.18 p.m.

Mr. Brian Sedgemore: These two reports raise at least two important issues, the first of which has not been discussed tonight. It is this: what are the legal and moral responsibilities of private enterprise firms when they enter into negotiations with Governments when their firms are in difficulty? From the first to the last day that the Court Line managers and directors were in consultation with the Government until 15th August when the firm went into liquidation, this was a private enterprise firm. If anyone was going to make public statements which would bring the firm to its knees and ensure its collapse, it should surely, both legally and morally, have been the directors of the firm.
The report of the inspectors of the Department of Trade has made clear that in their view there was no fraudulent trading during that period, but they also made clear that they do not preclude any other criminal offences which might have been committed or other actions for civil remedies by the people who suffered from the crash.
The second issue which these reports raise concerns the rôle of the Government when a private enterprise firm comes to them for help and they decide that they will not guarantee the future of that firm. They will help it and will want further information, but they are not prepared to guarantee it against any future contingency, including the possible contingency, which arose in this case, of the total incompetence of the management and directors of the firm.
When the Ombudsman and the inspectors inquired into this aspect of the report, they found that the then Secretary of State for Industry had acted speedily and decisively, had come to a crucial decision within five days, including a weekend,


when a firm was in dire distress, was running a competent Department and throughout had acted with great integrity, I dare say that that is what sits in the gullet of the hon. Member for Henley (Mr. Heseltine). No one is ever likely to produce a report accusing him of running a competent Department or of acting with great integrity at a time of critical stress.
The only criticisms that the two reports made of the then Secretary of State for Industry was that he should have qualified his support for the future of Court Line more than he did. The only result of that would have been that 400,000 holidaymakers would have lost their holidays instead of the 100,000 holidaymakers who actually lost their holidays.
I end my speech with the reflection that someone in the House must define where the dividing line comes between administration and policy. If the Chancellor of the Exchequer makes a statement in the House based upon economic facts known to him and makes a judgment which subsequently leads speculators or members of the public to lose money, is that statement to be the subject of an inquiry by the Ombudsman? It seems to me that when a Minister makes a judgment in the House, be it political, moral or economic, based upon the facts available to him, that is a matter of policy. It is not a matter of administration. In that sense my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) may well be right.

6.22 p.m.

Mr. William Whitelaw: The shortage of time makes it inevitable that I must not allow myself to be provoked by the remarks of the hon. Member for Luton, West (Mr. Sedgemore). I merely say to him that I believe he has done his case no good by his totally unjustified attack on the integrity of my hon. Friend the Member for Henley (Mr. Heseltine).
I wish to refer to one straightforward and simple issue and in doing so I wish to follow the important speeches made by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), the right hon. Member for Fulham (Mr. Stewart), who has been the Chairman of the Select Committee dealing with the

Ombudsman, and the hon. Member for Colne Valley (Mr. Wainwright). I wish to refer specifically to the repercussions in the long term of the Government's decision to reject the Ombudsman's report, especially when that report is supported on the main points by the departmental report.
My hon. and learned Friend the Member for Darwen made an important point about the Government summarily rejecting the report before there was a chance for the House to debate it. That point was also made by the right hon. Member for Fulham and by the Select Committee which considered the matter. I hope that on reflection the Government will consider those points carefully, because I believe that in the context of Parliament they are extremely important.
I was originally one of those who had doubts about the effectiveness of an Ombudsman when the proposal was first put forward. Some of those doubts were borne out by what we are discussing tonight. However, as time has passed I have realised that in the main those doubts were not well-founded. It became clear to me that we all have constituents who consider that they have been unjustly treated by a Government Department and who believe that their last hope of redress rests with a reference to the Ombudsman. No doubt like other right hon. and hon. Gentlemen, I sometimes have to explain to my constituents that they are the victims of the laws as they stand and that there is really no question of maladministration at all. They may not like that explanation, but I believe that as Members of Parliament we have a duty to refer cases to the Ombudsman only when we believe that there is a possibility of injustice through maladministration.
Therefore, it is surely all the more important to preserve confidence in the impartiality and the standing of the Ombudsman. If the public begin to feel that the Government of the day will reject any of his reports which they do not like or in some way they find inconvenient, I believe, as does the hon. Member for Colne Valley, that a valuable safeguard in our parliamentary institutions will be seriously undermined. That will do harm to the relationship between the Government, Parliament and the public. Incidentally, I point out to the Secretary of State for Energy that if he


were to continue his campaign for greater public participation his ideas would tend to have an increasingly hollow ring.
I am not suggesting for one moment that the Government must accept automatically every Ombudsman's report. I entirely agree with the right hon. Member for Fulham on this aspect. However, I maintain that the Government should reject a finding only exceptionally and, indeed, for good reasons. At this point I take issue with the hon. Member for Liverpool, Walton (Mr. Heffer). My view is broadly supported by the remarks of Lord George-Brown and the late Richard Crossman during the debate on the Sachsenhausen case, to which my hon. and learned Friend the Member for Darwen referred. During that debate the then Mr. George Brown said:
Having established the office of Parliamentary Commissioner, whether I think his judgment is right or wrong, I am certain that it would be wrong to reject his views.
The late Richard Crossman, graphically and perhaps typically and in his best traditions, in winding up the debate said:
My right hon. Friend the Foreign Secretary says, ' Thank you, Ombudsman, for making a difficult decision. I grudge it you a bit, but I give it to you just the same. ' That seems to be a healthy position."—[Official Report, 5th February 1968; Vol. 758, c. 116, 170.]
That is the case which the Government in this instance have to answer. That was the case put forward by two distinguished Ministers in the Labour Party.
In considering whether the Government and the right hon. Gentleman on their behalf made an error of judgment in steering an extremely difficult and narrow course, I make it clear, as both the Ombudsman and the departmental report have done, that I am absolutely satisfied that the Government and the right hon. Gentleman acted in good faith. As the departmental report says, there is no question of the statement being in any way untrue or reckless. That should be accepted.
Both reports conclude that there were errors of judgment. Other hon. Gentlemen have referred to paragraph 85 of the Ombudsman's report. It is clear that the statement was changed because it states:
The final version of the statement omitted any reference to the board's belief and ascribed to the Government themselves the view that the arrangements would stabilise the situation in respect of Court Line's interests".

In the light of that, I believe that the right hon. Gentleman must admit to himself, with the benefit of hindsight, that he was wrong to disregard the reservation in the proposed answer to supplementary questions with which he was briefed. I accept that he did not have directly the opportunity to use that supplementary answer, but he did something further. From the way that he made his statement, he did not follow that reservation. He went perceptibly in the opposite direction, as the right hon. Member for Fulham pointed out.
I have tried to examine what I should have done in the right hon. Gentleman's position. I must be honest and say that I am far from clear. I should like to think that with the reservation in that supplementary answer at the back of my mind, although I might not have used it I would have been guided by it. I know that this is a judgment with the benefit of hindsight. However, when the right hon. Gentleman considers it with the benefit of hindsight I believe that he will take the view that on the whole it was a mistake—a mistake in a difficult situation, and an error of judgment.
Therefore, both the Ombudsman's report and the departmental report agree that errors of judgment were made. On reading the evidence it is impossible to come to any other conclusion. I accept at once that it was an extremely difficult task for Ministers in any Government to deal with. On the one hand, I accept that they had to preserve confidence in Court Line. On the other hand they had to be careful not to give assurances to the general public which, on the evidence available, they were not in a position to give. They had to steer a balance between the two. In my judgment and in the judgment of both the reports and of a large number of people who considered the matter, they erred on the wrong side. They did not give sufficient reservations.
Frankly, I believe that this was an error of judgment. I do not accept, as the Secretary of State for Trade said, that to have made that reservation would have destroyed confidence in Court Line. I cannot prove it, but I do not feel that way about it. I am entitled to my views.
I believe that an error of judgment has been made. There can be no great blame on a Minister who makes an error of judgment in a crisis situation. Indeed,


if I were to say anything different I should certainly be throwing very heavy stones in a glasshouse, because I know the mistakes that I have made in crisis situations.

Mr. Russell Kerr: So do we.

Mr. Whitelaw: Certainly. I have always been ready to admit them in this House, as the hon. Gentleman knows. It is usually wise to admit one's mistakes. I believe that it is particularly important that the Secretary of State, on behalf of the Government, should do so. If he does, he will uphold the strong position of the Ombudsman and thereby strengthen our parliamentary democracy.
Therefore, in the best interests of future government and of this House, I ask the right hon. Gentleman to get up and to say that, on mature reflection, the Government will now unequivocally accept the Ombudsman's report, backed as it is by the departmental investigation. If not, I hope that my right hon. and hon. Friends will register in the Division Lobby their dissent from what I believe would be an unwise and damaging Government decision which they will live to regret.

6.32 p.m.

The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): All who have taken part in the debate recognise its importance, and I certainly welcome the opportunity to take part in it.
I want to make clear to the House that I accept full personal responsibility for all the decisions taken by the Government last year, for the statements that I made in the House and for my relations with my civil servants, which have been brought to the attention of the House in detail, because I insisted that all the departmental documents should be made available to the Ombudsman and to the inspectors.
I hope to persuade the House that on reflection, the Government's decisions and statements last year were fair and reasonable and that the criticisms made in the two reports raise major policy considerations of which the House should be aware before reaching its own view on the matter.
It is sometimes said that the Government are dismissing these two reports.

That is not so. The Government are expressing their own view. It has been said that the Government should not have expressed their view before the House expressed its view. But the Government were asked to express their view at the very beginning of the inquiry. As the Ombudsman makes clear, the Government were given an opportunity to express their view before the report was finalised. Therefore, the Government must give their view on a matter of this kind.
I am grateful to the Commissioner and to the inspectors for their courtesy. I had the opportunity of giving evidence and of being closely cross-examined on these matters.
Both reports have criticised the Government. In view of some of the comments which have been made, not least by hon. Gentlemen opposite and others during the year, before turning to the criticisms I should like to reiterate some of the other comments which were made about the Government and their conduct during this matter.
The Ombudsman said
both officials and Ministers acted with the speed and the sense of responsibility which the situation required; and secondly that what was done and was said publicly was done and said in good faith.
There is no suggestion that we inflated optimism beyond what we then thought to be right. The Ombudsman said:
But the Government's view…was based on an honest and careful assessment of that information, taking the weaknesses into account.
The inspectors said that
everybody concerned in the events of the last few weeks…acted with the highest degree of public mindedness".
They went on to endorse the Government's objectives of seeking to save the shipyards and at the same time of seeking to help the holidaymakers. I make no apology for that. The inspectors thought that we would have been wrong to allow a receiver to go in, though had my words taken the form indicated by some Court Line would have collapsed on the afternoon of that debate.
The inspectors said that the Government had sufficient information to enter into an agreement to buy the shipyards, that the 100 per cent. acquisition was right, that the motives were right, that


the price was fair, that the statements made were neither untrue nor reckless, that bona fides were beyond question and that an honest and careful assessment had been made.
I have referred only briefly to these passages in the reports, because for over a year the Opposition have been engaged in fanning the wild and reckless charges made against Ministers which have been wholly and completely repudiated by what is in the two reports.
I should like to put the record straight once and for all, because there were serious criticisms in the reports, to which I shall come. However, they were not directed against the Government's integrity, good faith, public-mindedness, honesty or the care with which they approached the matter.

Mr. Kenneth Lewis: Then accept the reports.

Mr. Benn: I have little enough time to say much on an important matter.
I now turn to the criticisms made in the two reports. The Parliamentary Commissioner—this has been quoted already but I must quote it again—said:
although I understand the strength of the argument that confidence must not be unnecessarily impaired, it seems to me to be an important principle also that undue confidence should not be created or maintained.
That is the nature of the criticism. Indeed, as my right hon. Friend the Member for Fulham (Mr. Stewart) pointed out, the Ombudsman later said:
But since (in my view) the statements suggested confidence without any qualification, it seems to me that they went somewhat further than the circumstances warranted…the statements were liable to leave a misleading impression with the public.
The inspectors reiterated that by saying that the statements
are to be criticised for going too far by way of assurance to holidaymakers, without sounding any note of caution or reserve.
Therefore, both reports make criticisms and allot some share of responsibility to the Government for the loss to the holidaymakers. But I say, because it needs to be said, that there is no hint or suggestion in the reports—obviously the House knows this, but many people outside do not—that the Government were in any way responsible for the collapse of Court Line.

Many of my right hon. and hon. Friends, not least myself, during the year, as a result of the help given by the Opposition, have been given the impression that in some way we precipitated the collapse of Court Line. Both reports recognised that Court Line would have collapsed at the time that it came to the Government if the Government had not stepped in. In those circumstances, more holidaymakers would have lost their holidays, the shipyard workers might have had their jobs at risk, and the orders for ships would have been vulnerable to renegotiation if the company had gone through receivership.
Therefore it is necessary to make clear in this debate, before coming to the matters of judgment upon which the House wishes to reach a view, that Court Line failed because of circumstances which had nothing whatever to do with the Government. The directors of Court Line, as became clear during the time devoted to the unravelling of their affairs, had totally mishandled their own finances and were unable to give the Government, let alone their own shareholders, any real indication of the company's position.
I turn to the two questions at the heart of the debate to which the inspectors and the Ombudsman invited us to address our minds. First, was it right for the Government to maintain confidence at the time they decided to do so? I believe that, it was, for one simple reason. We honestly believed, in the light of all the information, that that confidence was justified. I should find it hard to accept from anyone else, however independent or skilled, that as a Minister I had an obligation to say something that I did not believe just because later it might be more convenient if I could have been shown to have said something which I did not then fully believe.
I shall go further. It is argued that in five days no Government could know the truth. However, even as late as 1st August and five weeks after my statement in the House, Peat Marwick indicated in its third report
that Court Line had, on a going concern basis, a surplus of assets over liabilities, and overdraft facilities in excess of requirements at least to 30th September 1974.
What should the Government say when they are faced with a situation and their information points to a clear statement?


The Ombudsman lays it down in paragraph 74:
very properly, the Government accepted an obligation to incorporate in public statements about the negotiations references also to the future, as the Government saw it, of that business.
We did that, no more and no less.
I do not have to emphasise in detail the problem of confidence, but there are many firms whose problems are known to the Government at particular moments. I do not forget the statement made by the right hon. Member for Knutsford (Mr. Davies)—I have given him notice of this although he may not be present, and I quote him with approval, not with criticism—in which he explained why he had not done more about Vehicle and General although his Department had known for several months that it was in trouble. He said:
It is always fairly easy, with the benefit of hindsight, to say that this should have been the case. The question to which the right hon. Gentleman "—
I was asking him the question—
should address himself is the wisdom of disturbing confidence in a concern which carries a large amount of insurance of this kind if such lack of confidence were not fully justified. It is that particular concern which one has to maintain in mind—and correctly so."—[Official Report, 2nd March 1971;Vol. 812, c. 1400–1.]
I believe that the travel company with little sums of money from many people is comparable to the insurance situation and that the right hon. Member for Knutsford's advice should have been tailor-made for us as we looked at this difficult judgment.
Secondly, did the statements go too far and give a guarantee to the holiday-makers? In none of my statements or supplementaries was the word "guarantee" used. When one of my hon. Friend's said "What about the shipyards?" I said that even the ownership of the shipyards would remain with Court Line until the negotiations were completed. What is true is that the holiday-makers welcomed the fact that the certain loss of their holidays had been averted, and so it was. That was the black cloud that was lifted. However, no serious newspaper—neither The Times, the Daily Telegraph, the Financial Times nor The Guardian—had any doubt that what I had said was that the Government would seek to buy the shipyards but that the

holiday business would remain in private ownership. There was no suggestion that we had given a guarantee.

Mr. Antony Buck: Mr. Antony Buck (Colchester) rose—

Mr. Benn: The hon. and learned Gentleman will have to allow me to continue because I have very little time. I do not want to be discourteous to him, but I hope he will recognise that I have waited a year to make this speech and I must be allowed to do so. I am not attacking any Conservative Member.
Why did the holidaymakers not cancel their holidays? One argument was that they did not do so because of my statement. However, The Guardian gave the real reason, and on 28th June 1974 that newspaper quoted one of the central London travel agents. He said:
One of the problems however was that people exercising an option to cancel could not get their money back.
Therefore, it does not follow that the holidaymakers, who obviously had hopes raised that the problems that confronted them might be averted, would receive a guarantee from the Government.
I turn to what the Ombudsman said about this. He said:
it does not follow that the inclusion of a specific qualification would necessarily have produced a different reaction among holiday-makers.
I believe that he is right. Unless I had gone out of my way to separate in that statement the purchase of the shipyards from our total lack of confidence in relation to the holidaymakers, which we did not feel—in which case Court Line would have collapsed despite our decision to acquire—I do not believe that a modest qualification of the kind around which this whole debate has rotated would have made any difference.
I turn to the most significant passage in the report that we are considering. Upon this, above all else, I hinge our case. The inspector said:
The word 'guarantee' has a particular meaning in law and applies only when the relevant parties are in legal relationship with each other, usually direct contractual relationship. The word has been used somewhat freely in regard to the matter of Court Line and when we use it or mention it hereafter we do not do so in a legal sense, because in our view that does not apply at all, but in the colloquial sense.
In Mr. Wedgwood Benn's statements the word 'guarantee' was not used at all.


I invite the House to consider the meaning of that passage. The inspectors are saying that whereas in law there is a guarantee which everybody knows about, in the relations between Government and industry there is a colloquial guarantee, which is a quite different thing. No Minister in any Government could possibly accept the invention of an entirely new concept, the concept of a colloquial guarantee. This is the issue to which the Government had to turn their mind in considering how to respond to the criticisms. If the criticisms—

Mr. Michael Latham: Mr. Michael Latham (Melton) rose—

Mr. Benn: Perhaps the hon. Gentleman will allow me to develop the point. If the criticisms were accepted and if the easy method of the personal apology—which the House would always, in the case of any hon. Member, be ready to accept—were adopted, the House would be accepting and embracing the idea that in the relationship between Government and industry we do not have to have a legal guarantee because anything a Minister says may be turned into a colloquial guarantee.

Mr. Latham: Mr. Latham rose—

Mr. Benn: I am not attacking the Conservative Party. I am seeking to develop the idea that it would be wrong for these criticisms to be accepted. On occasions the House receives news of Government guarantees. For example, there was the case of Alfred Herbert and a formal guarantee was sought for British Leyland. However, to offer help to a company is not a formal guarantee.
I turn to the exact parallel. It is the parallel of Rolls-Royce in 1970–71. On 11th November 1970, when Sir Frederick Corfield was Minister of Aviation and Supply he announced that the Government were ready to extend a further sum of £42 million to Rolls-Royce, which was then in private ownership. In explaining the reasons for this decision Sir Frederick Corfield said:
I stress that the principal purpose of this arrangement is to ensure the success of the RB211–22 engine, to ensure that Rolls-Royce is in a position to fulfil its contract with Lockheed."—[Official Report, 16th November 1970; Vol. 806, c. 403.]

How does that differ from the statement I made—to ensure, to support, to stabilise?
When Sir Frederick Corfield announced the collapse of Rolls-Royce, he said—I am not saying that he was wrong—
The Government have no liability in respect of the contract between Rolls-Royce and Lockheed."—[Official Report, 4th February 1971; Vol, 810, c. 1922.]
In my submission, that was an exactly parallel case. The Conservative Government tried to help and failed, and no one suggested that the Parliamentary Commissioner should look at what Sir Frederick or the right hon. Member for Knutsford had done. The inspectors were called in and they wrote a very big report on Rolls-Royce. But they did not even interview the Minister who had said that the Government's launching aid was to ensure that the contract with Lockheed could be fulfilled.
I say that these are policy matters. It was on their policy decision that the Conservative Government were criticised over the Rolls-Royce case, and it is as a policy matter that we should have been criticised, if criticism there has to be, over the handling of Court Line.
It is not right to take a policy decision given with absolute integrity and relate it in some way to matters of maladministration—although that word is not mentioned in the Parliamentary Commissioner's findings. Nor is it right for inspectors, doing the best job they can as distinguished lawyers and accountants, to invent the concept of a colloquial guarantee as a precursor for criticism of a Minister who is accountable to the House of Commons.
This is a very important question. All Governments are concerned with the success of industry. All major firms in trouble are likely to turn to the Government for advice or assistance. Members of this House necessarily come to Ministers if important firms in their constituencies run into difficulty, and every Minister concerned with industry, if my experience is anything to go by, has a flood of letters, deputations, delegations and discussions when such crises appear.
The Government can do three things. First, they can let events take their course so that receivership may follow, Secondly,


they can wheel into play the formal, precise Government guarantee, embodied in a parliamentary statement or order under which everyone knows exactly what the position is. But the most common case falls into neither of these categories but into the third, in which the Government try to help without commitment and without guarantee. Some attempts will fail, as Rolls-Royce and Court Line failed. But many more succeed—many more than see the light of day, because no firm wishes to advertise itself as coming to the Government for help, because that of itself might undermine its confidence.
I have details here—it is an old list—relating to firms which the Government for the first time helped to secure against some difficulty or other, and they include 64,237 jobs in 18 firms. Some have now recovered; others have run into difficulties. Alfred Herbert was one of the latter, and it has now been taken over and absorbed.
But I warn the House that there is a deeper danger. If in accepting the reports, or asking for an apology which would imply accepting them, we blur the difference between the cases where the Government try to help without commitment and those cases where the Government give a full-scale guarantee—if the crucial and clear difference between what is a guarantee and what is not a guarantee is blurred by the Court Line affair—the whole nature of the relations between the Government and industry will necessarily change. I believe that the House would not wish to make such a change, with all its far-reaching consequences, without the most careful consideration of what would be involved, and certainly would not wish to make it by what the lawyers call a side-wind.
This is not a theoretical matter. It is a practical matter. Unemployment is now over I million and is rising. In the difficult economic circumstances which face Britain, the number of rescue cases is bound to rise, threatening jobs and manufacturing capacity. The firms in trouble and those who work in them will be scattered around the country in the constituencies of many hon. Members. Members of all parties will be approaching Ministers for advice and help. Constituents whose jobs are at risk, be they workers or managers, will look to Par-

liament and the Government to protect them from the harshest impact of market forces which do not count the human cost.

Mr. Whitelaw: I generously conceded the difficulties of the situation in which the right hon. Gentleman was placed. What I am saying is that, having expressed all these reservations, he would serve the House best if he followed the advice of the late Richard Crossman in the Sachsenhausen case, expressed the reservations and accepted the Parliamentary Commissioner's report.

Mr. Benn: If I were to adopt that course—which I could not do because I believe it would be wrong to do so—I would be inviting the House to frighten future Ministers from trying to help in cases which will come to their attention. They would be left with only two courses open to them—either to allow bankruptcy or go for a full-scale Government guarantee.
I know that there are many hon. Members who think that a massive disengagement of Government and Parliament from industry would be a good thing. I do not take that view. This is absolutely relevant to the Court Line affair. If hon. Members and Ministers turn their backs on those who come to them for help for fear of rebuke or being claimed to be giving guarantees, Parliament will not be performing the function on behalf of its constituents that the Government sought to do in the case of Court Line.
Court Line came to us. We did not go to Court Line. As a result of Government policy, 9,000 jobs and many orders were saved from the terrors of bankruptcy which would have affected these men and their prospects. Holiday-makers who would most certainly have lost their holidays at once if the Government had let Court Line collapse at least had their holidays protected until 15th August. Later holidaymakers would have lost everything had it not been for the legislation which gave them a refund as a result of the interest-free loan given to the Air Travel Fund. A substantial salvage was achieved.
That is one reason why I seek the House's support. The other and more important reason is this. If judgments are to be made on Ministers upon the


industrial policies they pursue, they must be passed by the House of Commons and the people as a whole and not dealt with indirectly when these are not matters, as is quite clear in this case, of company law or of maladministration. Having given this account to the House, I hope that it will be able to support the Government

not only for what they did about Court Line but for the response they have given to the reports now before us.

Question put, That this House do now adjourn:—

The House divided: Ayes 156, Noes 180.

Division No. 328.]
AYES
[6.59 p.m.


Adley, Robert
Hastings, Stephen
Pardoe, John


Aitken, Jonathan
Hawkins, Paul
Parkinson, Cecil


Atkins, Rt Hon H. (Spelthorne)
Hayhoe, Barney
Pattie, Geoffrey


Awdry, Daniel
Henderson, Douglas
Percival, Ian


Bain, Mrs Margaret
Heseltine, Michael
Peyton, Rt Hon John


Banks, Robert
Holland, Philip
Price, David (Eastleigh)


Benyon, W.
Hordern, Peter
Prior, Rt Hon James


Biffen. John
Howe, Rt Hon Sir Geoffrey
Pym, Rt Hon Francis


Biggs-Davison, John
Hunt, John
Raison, Timothy


Blaker, Peter
Hurd, Douglas
Rees, Peter (Dover &amp; Deal)


Boscawen, Hon Robert
Hutchison, Michael Clark
Reid, George


Bottomley, Peter
Irvine, Bryant Godman (Rye)
Renton, Tim (Mid-Sussex)


Boyson, Dr Rhodes (Brent)
Jessel, Toby
Rhys Williams, Sir Brandon


Braine, Sir Bernard
Johnson Smith, G. (E Grinstead)
Ridley, Hon Nicholas


Brittan, Leon
Kershaw, Anthony
Rifkind, Malcolm


Brotherton, Michael
Kilfedder, James
Roberts, Michael (Cardiff NW)


Brown, Sir Edward (Bath)
King, Tom (Bridgwater)
Rodgers, Sir John (Sevenoaks)


Buck, Antony
Kirk, Peter
Rossi, Hugh (Hornsey)


Bulmer, Esmond
Knox, David
Rost, Peter (SE Derbyshire)


Butler, Adam (Bosworth)
Lane, David
Sainsbury, Tim


Carlisle, Mark
Latham, Michael (Melton)
Shaw, Giles (Pudsey)


Carr, Rt Hon Robert
Lawrence, Ivan
Shelton, William (Streatham)


Chalker, Mrs Lynda
Lawson, Nigel
Shepherd, Colin


Clark, Alan (Plymouth, Sutton)
Le Marchant, Spencer
Sims, Roger


Cooke, Robert (Bristol W)
Lester, Jim (Beeston)
Skeet, T. H. H.


Cope, John
Lewis, Kenneth (Rutland)
Smith, Cyril (Rochdale)


Cormack, Patrick
Luce, Richard
Smith, Dudley (Warwick)


Costain, A. P.
McAdden, Sir Stephen
Speed, Keith


Dean, Paul (N Somerset)
McCrlndle, Robert
Stainton, Keith


Drayson, Burnaby
Macfarlane, Neil
Stanbrook, Ivor


Dykes, Hugh
MacGregor, John
Steel, David (Roxburgh)


Edwards, Nicholas (Pembroke)
Macmillan, Rt Hon M. (Farnham)
Stewart, Donald (Western Isles)


Emery, Peter
McNair-Wilson, M. (Newbury)
Stokes, John


Fell, Anthony
Marshall, Michael (Arundel)
Stradling Thomas, J.


Finsberg, Geoffrey
Marten, Neil
Taylor, R. (Croydon NW)


Fisher, Sir Nigel
Mates, Michael
Tebbit, Norman


Fletcher, Alex (Edinburgh N)
Mather, Carol
Thatcher, Rt Hon Margaret


Fletcher-Cooke, Charles
Maudling, Rt Hon Reginald
Tugendhat, Christopher


Fookes, Miss Janet
Mawby, Ray
Vaughan, Dr Gerard


Fry, Peter
Maxwell-Hyslop, Robin
Viggers, Peter


Gardiner, George (Reigate)
Mayhew, Patrick
Wainwright, Richard (Colne V)


Glyn, Dr Alan
Miller, Hal (Bromsgrove)
Wakeham, John


Godber, Rt Hon Joseph
Moate, Roger
Warren, Kenneth


Goodhart, Philip
Monro, Hector
Weatherill, Bernard


Goodhew, Victor
Montgomery, Fergus
Welsh, Andrew


Goodlad, Alastair
Moore, John (Croydon C)
Whitelaw, Rt Hon William


Gow, Ian (Eastbourne)
More, Jasper (Ludlow)
Winterton, Nicholas


Grant, Anthony (Harrow C)
Morris, Michael (Northampton S)
Young, Sir G. (Ealing, Acton)


Griffiths, Eldon
Morrison, Charles (Devizes)



Grimond, Rt Hon J.
Morrison, Hon Peter (Chester)
TELLERS FOR THE AYES:


Grist, Ian
Neave, Airey
Mr. Anthony Berry and


Hamilton, Michael (Salisbury)
Nelson, Anthony
Mr. Russell Fairgrieve.


Hampson, Dr Keith
Newton, Tony



Harrison, Col Sir Harwood (Eye)
Normanton, Tom





NOES


Allaun, Frank
Bottomley, Rt Hon Arthur
Cook, Robin F. (Edin C)


Archer, Peter
Bradford, Rev Robert
Corbett, Robin


Armstrong, Ernest
Buchanan, Richard
Cox, Thomas (Tooting)


Ashton, Joe
Callaghan, Jim (Middleton &amp; P)
Cunningham, Dr J. (Whiteh)


Atkinson, Norman
Campbell, Ian
Dalyell, Tarm


Barnett, Guy (Greenwich)
Carter-Jones, Lewis
Davidson, Arthur


Bates, Alf
Castle, Rt Hon Barbara
Davies, Bryan (Enfield N)


Bean, R. E.
Clemitson, Ivor
Davies, Denzil (Llanelli)


Benn, Rt Hon Anthony Wedgwood
Cocks, Michael (Bristol S)
Davis, Clinton (Hackney C)


Bidwell, Sydney
Cohen, Stanley
Deakins, Eric


Bishop, E. S.
Coleman, Donald
de Freitas, Rt Hon Sir Geoffrey


Booth, Albert
Conlan, Bernard
Delargy, Hugh




Dell, Rt Hon Edmund
Jeger, Mrs Lena
Powell, Rt Hon J. Enoch


Dormand, J. D.
Jenkins, Rt Hon Roy (Stechford)
Prescott, John


Douglas-Mann, Bruce
Jones, Barry (East Flint)
Price, C. (Lewisham W)


Duffy, A. E. P.
Jones, Dan (Burnley)
Rees, Rt Hon Merlyn (Leeds S)


Dunn, James A.
Judd, Frank
Richardson, Miss Jo


Dunnett, Jack
Kerr, Russell
Roberts, Gwilym (Cannock)


Eadie, Alex
Kilroy-Silk, Robert
Robertson, John (Paisley)


Edge, Geoff
Lamborn, Harry
Rodgers, George (Chorley)


Edwards, Robert (Wolv SE)
Lamond, James
Rooker, J. W.


Ellis, John (Brigg &amp; Scun)
Latham, Arthur (Paddington)
Roper, John


Ennals, David
Lewis, Ron (Carlisle)
Ryman, John


Evans, Fred (Caerphilly)
Lipton, Marcus
Sandelson, Neville


Evans, Ioan (Aberdare)
Litterick, Tom
Sedgemore, Brian


Ewing, Harry (Stirling)
Loyden, Eddie
Shore, Rt Hon Peter


Faulds, Andrew
Luard, Evan
Short, Rt Hon E. (Newcastle C)


Fitch, Alan (Wigan)
Lyon, Alexander (York)
Silkin, Rt Hon John (Deptford)


Fitt, Gerard (Belfast W)
Lyons, Edward (Bradford W)
Sillars, James


Flannery, Martin
McCartney, Hugh
Silverman, Julius


Fletcher, Raymond (Ilkeston)
McCusker, H.
Skinner, Dennis


Fletcher, Ted (Darlingon)
MacFarqunar, Roderick
Small, William


Foot, Rt Hon Michael
Mackenzie, Gregor
Smith, John (N Lanarkshire)


Forrester, John
McMillan, Tom (Glasgow C)
Snape, Peter


Fowler, Gerald (The Wrekin)
Madden, Max
Spearing, Nigel


Fraser, John (Lambeth, N'w'd)
Mahon, Simon
Stallard, A. W.


Freeson, Reginald
Marks, Kenneth
Stewart, Rt Hon M. (Fulham)


Garrett, John (Norwich S)
Marquand, David
Taylor, Mrs Ann (Bolton W)


Garrett, W. E. (Wallsend)
Marshall, Dr Edmund (Goole)
Thomas, Ron (Bristol NW)


George, Bruce
Marshall, Jim (Leicester S)
Tinn, James


Gilbert, Dr John
Mason, Rt Hon Roy
Urwin, T. W.


Ginsburg, David
Maynard, Miss Joan
Wainwright, Edwin (Dearne V)


Gould, Bryan
Meacher, Michael
Walker, Terry (Kingswood)


Graham, Ted
Mellish, Rt Hon Robert
Ward, Michael


Hamilton, James (Bothwell)
Mendelson, John
Wellbeloved, James


Hamilton, W. W. (Central Fife)
Mikardo,Ian
White, Frank R. (Bury)


Hardy, Peter
Millan, Bruce
Whitehead, Phillip


Harper, Joseph
Miller, Mrs Millie (Ilford N)
Whitlock, William


Harrison, Walter (Wakefield)
Molloy, William
Williams, Alan (Swansea W)


Hatton, Frank
Molyneaux, James
Williams, Rt Hon Shirley (Hertford)


Hayman, Mrs Helene
Morris, Charles R. (Openshaw)
Wilson, Rt Hon H. (Huyton)


Healey, Rt Hon Denis
Mulley, Rt Hon Frederick
Wilson, William (Coventry SE)


Heffer, Eric S.
Newens, Stanley
Wise, Mrs Audrey


Horam, John
Noble, Mike



Hoyle, Doug (Nelson)
O'Malley, Rt Hon Brian
Woodall, Alec


Huckfield, Les
Orbach, Maurice
Woof, Robert


Hughes, Robert (Aberdeen N)
Ovenden, John
Wrigglesworth, Ian


Irvine, Rt Hon Sir A. (Edge Hill)
Palmer, Arthur
Young, David (Bolton E)


Jackson, Colin (Brighouse)
Park, George



Jackson, Miss Margaret (Lincoln)
Parry, Robert
TELLERS FOR THE NOES:


Jay, Rt Hon Douglas
Pavitt, Laurie
Mr. Tom Pendry and



Perry, Ernest
Mr. David Stoddart.

Question accordingly negatived.

TEXTILE CLOTHING AND FOOTWEAR INDUSTRIES

Motion made, and Question proposed, That this House do now adjourn—[Mr. Pavitt.]

Mr. Speaker: Before I call the Secretary of State for Industry, I want to tell the House that in the last debate when we had about the same amount of time available, because that debate, in March, went on till midnight, 26 back benchers spoke in 205 minutes. That is an average of about eight minutes each. I have the names of 30 back benchers who want to speak today, so really short speeches are the answer. I propose to be influenced in my selection by the facts whether hon. Members did not catch my eye in the last debate or whether they spoke for a very short time.

7.11 p.m.

The Secretary of State for Industry (Mr. Eric Varley): I know that tonight we shall hear strong expressions of concern for the textile industry. The number of hon. Members who have indicated that they want to catch your eye, Mr. Speaker, bears that out. I also know that hon. Members who take part in the debate will be voicing their acute worries about the present difficulties of the textile industry and expressing the concern of their constituents.
The objective of the Government's textile policy continues to be a prosperous, internationally competitive industry without permanent special protection, but one which has effective safeguards against import disruption which jeopardises that objective, and one where there is equalisation of the competitive conditions faced by the United Kingdom industry and the


textile industries of other developed countries.
That is our policy objective. What we cannot do, and what we should not do, is to stop the process of change in the industry. The industry—unions and management alike—has recognised the need for change. In fact, the Textile Council's 1969 Productivity and Efficiency Study on the Lancashire spinning and weaving industry and the 1969 Atkins Report on the Yorkshire wool textile industry both recognised the inevitability of change and postulated smaller, streamlined industries for the future. Only in this way could viable producers, and more secure and better-paid jobs, be maintained. Both these studies recognised the facts that there were—and still are—too many weak units operating in many sectors of the industry.
The post-war history of the textile industry is one of continuing decline in the production of cotton and, to a lesser extent, wool textiles. This was bound to be. We could not expect to remain the textile factory of the world. But the change in the industry is not always downwards and the decline in these traditional sectors, taken over a long period, has not been accompanied by long-term—I stress "long-term"—widespread unemployment. The same period has seen a substantial development in the use of man-made fibres—in both the cotton and wool sectors—and expansion of knitting. Between 1966 and 1975 deliveries of man-made fibre staple more than doubled. This competition between fibres and between methods of production is a vital stimulus to the creation of a prosperous, internationally competitive industry.
Successive Governments, not least the present Government, have helped positively to encourage and assist this process of adaptation in the industry. The 1959 Cotton Industry Act provided £30 million of public money to reduce capacity and encourage firms to re-equip. The sum of £15 million is being made available to the wool textile industry for grants towards re-equipment and rebuilding. The scheme includes, with the full support of the unions, assistance for closing uneconomic mills and firms. Now, up to £20 million of public money is being provided to raise productivity in the clothing industry, through help for modernisation

and re-equipment. The industry also has its own investment. In this connection, there is the undoubted success story of the transformation that took place in Lancashire. With Government assistance—principally in the form of interest relief grants—over £80 million has been invested in that sector in recent years, and more investment is being made.
The Government have helped financially, and continue to help, in the process of change. But hon. Members have made the point, the force of which I fully recognise, that the intent of this financial support could be frustrated and all this could be money down the drain if other measures are not taken. Other measures have been taken. Governments have helped, and this Government continue to help, to regulate the pace of that change to what is socially and economically acceptable.
The need to give industry time to adjust has long been recognised. For some 15 years now there has been progressive modification of the traditional United Kingdom approach of protection solely through tariffs but with duty-free access for Commonwealth countries. Tariff protection against Commonwealth countries was introduced on 1st January 1972. For several years up to that date—in addition to tariff protection against non-Commonwealth suppliers—there had already been quota protection against cotton yarn, woven cotton cloth and woven cotton made-ups from the developing countries.
There was—and is—protection against virtually all textiles and made-ups from Japan and the Eastern bloc. In 1972 quota protection was extended to cover polyester-cotton woven cloth and made-ups from the principal Asian suppliers. Here I would add that the industry itself asked for restraints on polyester-cottons for three years only. That was the time it judged it would need to become fully viable and competitive in this newly-developed sector of the industry.
The GATT Multifibre Arrangement, in the drafting and negotiation of which the United Kingdom took a leading part, was concluded in 1973. This was a major advance in two respects. First, it allowed restraints against actual or threatened disruption to be applied against products of all fibres—not only cotton textiles


and clothing as before. Secondly, it considerably tightened the rules, which the United Kingdom on the whole had always observed, against unjustifiable restrictions.
One of our policy objectives was to equalise competitive conditions for textiles in the principal industrial countries. Because of our traditional commitments to the Commonwealth and our recognition—in our own political, strategic and economic self-interest—of our responsibilities to the developing world, the United Kingdom has found itself with a higher level of import penetration, especially in the case of low-cost cotton textiles, than other industrial countries.
The Government fully accept that the burden must be spread more evenly. Hon. Members will recognise that we cannot make foreigners import more textiles. The burden can be redistributed only by international agreement. This is why the Government, with the full support of the British Textile Confederation and the TUC, which describe it as one of the cornerstones of our textile policy, support so strongly the GATT Multifibre Arrangement, under which unjustifiable restrictions in the more protectionist countries have been removed.
Following the conclusion of the Multi-fibre Arrangement, the United Kingdom was successful in the autumn of 1974 in negotiating a burden-sharing formula with the Community. Our last act in 1974 was in respect of Greek and Turkish cotton yarn. The House will recall the very strong pressures for that action to be taken against the rapidly rising imports of yarn from Greece and Turkey. Hon. Members will also recall the industry's, and their, claims about the jobs that would be lost if we did not move against those imports.
Our policy is to encourage and assist adaptation to change, and to regulate the pace of that change to what is socially and economically acceptable. We want a coherent and balanced policy which recognises the industry's needs and at the same time takes account of the constraints of wider national interests and international obligations. The present situation and the measures we have taken must be judged against that underlying policy.
I do not want in any way to understate the present difficulties in the textile industry. It is in the grip of a major down-

turn
in the textile cycle. Unlike previous downturns, this downturn has been experienced worldwide. My Department and I know of no country which is an exception to this. Demand opportunities for the textile industry have been savagely reduced. The collapse in demand for textiles and textile products is worldwide.
The problems of foreign textile industries are at least as bad as our own and in many cases are markedly worse. Early this year we had about 54,000 textile and clothing workers wholly or partly unemployed. That represents about 7 per cent. of the work force. In Germany, for example, 125,000 textile and clothing workers were out of work, which represents about 18 per cent. of the work force. In the United States there were 303,000 workers out of work, representing about 13 per cent. of the work force.
The United Kingdom is not alone in facing a high level of imports. For instance, our fair share of EEC clothing and textile imports would be approximately 23 ½ per cent. In 1973, the latest year for which we have comparable figures, we took 28 per cent. Germany also took more than her fair share, with 30 per cent. against 28 per cent. so did Benelux with 15 per cent. against 10½ per cent., and Denmark with 6 per cent. against 3 per cent. Only Italy and France took substantially less.

Mr. Cyril Smith: I accept the Minister's figures. Is he aware that the figures he is quoting for 1973 are hardly comparable with those for 1975? If he accepts the trade suggestion to regulate imports according to the state of trade, the figures for 1973 would be acceptable. But those same figures would not be acceptable for 1975.

Mr. Varley: The only comparable figures we have are the 1973 figures. If the hon. Gentleman has more up-to-date figures we shall be pleased to receive them. I do not underestimate the difficulties. We have shown that this situation is not peculiar to this country. It is worldwide. There is a worldwide recession.
Since 1973 other Community countries have almost certainly increased their shares, and ours has probably fallen. Even so, with the exception of Australia, I know of no substance in the claims


which are often advanced that in the present textile recession other countries have taken steps to reduce imports specifically of textiles where we have not. On the contrary, the MFA rule that existing import levels may not be cut back has been generally honoured. Other countries have not cut imports.
Some hon. Members continue to urge that we should cut imports. They dismiss the possibility of retaliation by other countries. When I made that statement on 23rd July one of my hon. Friends said "Try it". We cannot know the consequences of cutting imports unless we cut them. But is it likely that retaliation will take place? Other countries would do something about it, as Turkey has acted against our chemicals, plastics and engineering goods. They would ensure that their home demands were met by their home production. Our exports of textiles and clothing, which in 1974 amounted to over £1,100 million, would be up against far greater problems than those caused by the present low demand overseas. Significantly much of the drop in our textiles deliveries this year has been caused by the fall in exports, and entirely so in the case of continuous yarn. The retaliation would not be confined to textiles. Other British industries would be affected, jobs in those industries would be endangered and some jobs might disappear.
We could cut back imports only by breaking our international obligations. The MFA proscribes this and only allows growth to be contained. If we break the MFA we shall seriously weaken and possibly destroy the set of international rules which the Government and the industry agree are basic to our textile policy.
Similarly, the General Agreement on Tariffs and Trade would allow cutbacks only if imports were still rising—which overall is not the case. Behind these rules lie the lessons of the 1930s when each country tried to build protectionist walls around its own prosperity and employment, and learned, at the price of the worst slump in history, that this was an illusion. We should learn some lessons from history.
I make one further point about import cuts. Some sectors of the textile industry are to an extent dependent on imported textiles. As a result of the pattern of import trade which has evolved over the

years there are, for instance, weavers and knitters who cannot obtain the type of yarn they need from British suppliers. It is well worth remembering that not all users of yarn were wholehearted in their support of import restraints against Greek and Turkish cotton yarn.
When I made my statement a fortnight ago the hon. Member for Mid-Ulster (Mr. Dunlop) said that there was a firm in his constituency whose life was dependent on cotton grey cloth from China and that 400 jobs were in jeopardy because of the paucity of the import licences granted for this material. The traffic is not always one way. An across-the-board cut in textile imports would cause supply problems for firms who work on imported materials and could have serious effects on the employment they provide.
Instead the Government have announced a substantial range of other aids within our overall policy of encouraging change in the industry and protective measures to regulate the pace of that change. In my statement on 23rd July I outlined a package of measures to assist the industries.

Mr. David Steel: I understand the Minister's reasoning about the difficulties of import controls. Will he explain why the Government are not willing to accept the modest proposals of the wool textile industry, for example, on the labelling of goods sold in this country, especially in view of the Secretary of State for Trade's homily on buying British cars? Customers in the United Kingdom cannot tell whether they are buying British or foreign clothing as we do not stipulate the labelling of the country of origin.

Mr. Varley: I know that my hon. Friend intends to deal with that point. I am pleased that the hon. Gentleman could not fully agree with across-the-board import cuts. I think that I interpreted his remarks correctly. I know of his support for the developing nations. We realise that across-the-board cuts in textiles to the extent advocated in some quarters would damage the economies of the developing countries.

Dr. Keith Hampson: If that is so, why does the Department put restrictions on the imports of made-up clothing from the COMECON countries


but does not place restrictions on wool-predominant clothing from those countries? It is said that there is a need for restrictions, yet those countries are taking advantage of a loophole and swamping the United Kingdom with made-up clothing, including cheap suits, thereby undermining our wool-predominant market.

Mr. Varley: Historical obligations must be kept. My hon. Friend the Under-Secretary of State for Trade is prepared to deal with those matters in debate. We cannot take unilateral action on historical obligations without breaking the arrangements.
I was dealing with the package of measures to assist the industry which I announced in my statement of 23rd July. I announced the Government's decision to provide up to £20 million, under Section 8 of the Industry Act, to the clothing industry. If efficiency and productivity can be improved in this sector the whole textile industry would benefit. The Yorkshire woollen trade, for instance, has been losing markets because of the import of men's suits coming, in many cases, not from low-wage countries but from Scandinavia and Germany. There is certainly scope for recapturing this market.
Already we know of companies which are confident of taking advantage of the new scheme. It has been welcomed by the Chairman of the Clothing EDC as "strong and sensible action by the Government". The EDC is playing a major part in developing the scheme.
Within the limits on overall Government expenditure, the Industry Act is similarly available to help in other sectors. Whether there is scope—and the terms—will depend on the circumstances and will need careful working out with the industry's representatives. We shall be looking further into that in the weeks ahead. We are, for example, already in discussion with unions and management in the footwear industry about an industry scheme. The problems of footwear are in many ways similar to those of textiles. Again, I hope to be able to make a statement about the possibility of an industry scheme for footwear in the weeks ahead. Until the discussions are further advanced it is not possible for me to say what that assistance will be.

The British Textile Confederation has recently described the regulations restricting imports from Taiwan and the agreement with Hong Kong as more comprehensive in coverage than it dared to hope earlier this year. It has said that the agreement with Hong Kong appears to be as favourable from the British point of view as it could have expected.
I understand that the industry is concerned about imports from South Korea. The EEC negotiations with South Korea are now in their third session. With the agreement of the Community, we have asked for Article 3 of the MFA to be invoked. This will enable safeguard measures to be taken against sensitive imports from South Korea if the present session of negotiations fails to result in an agreement in the very near future. The coverage sought will be similar to that for Hong Kong and Taiwan.

Mr. Adam Butler: What time limit is the right hon. Gentleman putting on these negotiations with Korea before implementing Article 3?

Mr. Varley: The discussions are taking place now and we hope that they will be concluded quickly. We hope they will be concluded satisfactorily but, if they are not, we shall have to take the action which we know the EEC can take in accordance with the Multi-fibre Arrangement.
On 23rd July I announced the extension of surveillance licensing to cover all clothing and made-up textile items and I said that we were considering extension to footwear. If surveillance points to new threats of disruption, we shall not hesitate to invoke the safeguards of the Multi-fibre Arrangement.
I also made plain on 23rd July our intention that the ceilings on duty-free imports from Portugal will be properly applied. In addition, I mentioned the anti-dumping powers on which my hon. Friend the Under-Secretary of State will have something to say when he winds up the debate.
I announced that Government Departments were being asked to ensure as far as possible that they get their requirements of textiles, clothing and footwear from British manufacturers and that the British manufacturers use British materials. I looked to other purchasers in the public sector to be guided by the


the same principle. I should like here to acknowledge the strong action taken by my right hon. Friend the Secretary of State for Social Services in issuing instructions in this sense to the regional health authorities. Again, on 23rd July I was able to say that we have under consideration preshipment finance which the industry in Scotland in particular is pressing for.
I want to recall the specific proposals for action which the British Textile Confederation and the TUC's Textile and Footwear Committee have put to the Government since the Prime Minister's statement on 23rd May. They met my right hon. Friend the Chancellor of the Duchy of Lancaster and put specific matters to him. We were asked to support a clothing scheme. We are supporting a clothing scheme to the tune of £20 million. We were asked to extend surveillance licensing to clothing and made-ups. We are introducing this on 1st September. We were asked to apply the ceilings on duty-free imports from Portugal. We have already acted on two groups of products. We were asked to urge the conclusion of restraint arrangements under the MFA. We have done this, and a number of agreements have been concluded.
We were asked to anticipate restraints on sensitive imports if negotiations dragged on unduly. As I have already told the House, we have already started this process and discussions are taking place with South Korea. We were asked to affirm our readiness to act against any new threats of disruptive imports. We are so ready to act. We were asked to ensure that Government purchasing was from British manufacturers. We have taken steps to that end. We were asked to extend surveillance licensing to footwear, and we are considering that request. We were also asked to extend preshipment finance to the textile industries. Again, this is under urgent consideration. The Government are taking steps on virtually all the specific proposals put to them after the statement of 23rd May.

Mr. Nicholas Winterton: Will the right hon. Gentleman tell the House what results have been produced from the import surveillance?

Mr. Varley: My hon. Friend the Under-Secretary of State will deal with

that when he winds up the debate. I have indicated that, although we have not gone all the way with requests for an across-the-board cut in imports, since 23 rd May we have gone virtually all the way with the representations made to us by the industry.
We fully acknowledge and understand the industry's difficulties and its great concern. We do not underestimate that. We know exactly the situation and appreciate the concern that is being expressed in the textile and footwear industries. Fundamentally, those industries are suffering, like many others, from the world recession, which the Government cannot by themselves cure. The immediate need is to shelter those who earn their living in the industry from the worst effects, which, whatever their immediate popularity, would aggravate the recession and so defeat the purposes of the Government and of the industry.
There is no disagreement between the Government and the great majority of the industry's leaders about our objectives and strategy. The Government have confidence in the industry's future and we want to support the industry. I believe strongly that the industry does needless damage to its own confidence by talking down the Government's ability to help the industry to strengthen its competitiveness and so provide secure and well-paid jobs. The Government have repeatedly demonstrated their will and ability to do both, and they will continue to do so.

7.39 p.m.

Mr. Charles Fletcher-Cooke: As a locum tenens at this Box, I shall be very brief if only because if I take long I shall be publicly rebuked by my hon. Friend the Member for Macclesfield (Mr. Winterton). I also feel that words on this subject have been spilt in this Chamber and elsewhere over and over again and that we want now fewer words and more deeds. I do not complain that the Government have provided so much time for discussion of this important topic during this Session. In that respect they have done the textile industry proud.
We welcome the new Secretary of State for Industry to these debates. If he looks after the textile workers as well as he has looked after the miners we shall do very well indeed. However, something tells me from the tone of his speech that the Secretary of State for Trade will not allow


him to do so. We shall be watching the right hon. Gentleman to the extent to which he shows himself to be independent of the Secretary of State for Trade in these maters.
But what has happened to the Chancellor of the Duchy of Lancaster? Many right hon. and hon. Members will recollect that in the Prime Minister's statement in May it was said that the Chancellor was to undertake overall control of this important operation concerning textiles. It was said that the matter was to be spread over more than one Government Department and that it was important that the operation should be coordinated. The Chancellor of the Duchy was the selected and chosen instrument. However, from that day to this we have not seen or heard of the right hon. Gentleman. There has not been a single word uttered about his duties. Was that announcement merely made to overcome a temporary local difficulty, in that it was made before the referendum? Where is the Chancellor? Is he still involved in this matter?
The Secretary of State did not emphasise the immediate crisis that the textile and allied industries is undergoing. Short-time working is getting worse. Mills are closing, but that was not emphasised by the right hon. Gentleman. I shall ask the right hon. Gentleman about short-time working because I regard underemployment as almost more serious than unemployment. In March the British Textile Confederation calculated that 150,000 men and women were on short time in the textile industry, whereas Her Majesty's Government's figure was 20,000. That is an enormous difference, but that may be because the figures are kept on a totally different basis, the Government's figures not including those who are on long unpaid holidays. That is my information, but I would like the right hon Gentleman to explain why the figures are so different and whether the real figure can be regarded as 150,000.
Secondly, as regards under-employment the Secretary of State did not mention any relationship between the textile industry and the announcement yesterday by the Secretary of State for Employment about his new employment premium. I have my own views about that creation, but we want to know whether it is con- 
templated by the Government that it will be used in the textile industry.
The penetration of the home market is still a central issue in these debates. I am afraid that nothing that the Government have done or the Secretary of State has said has done more than to have a fringe effect. The Secretary of State repeated what so many of his predecessors have said—namely, attributing the trouble to the fall or collapse in world demand. That is by no means a sufficient explanation. According to all the reports, demand at home is unexpectedly good. What has happened is not that demand in the United Kingdom has failed but that demand has failed elsewhere. The foreign manufacturers who used to satisfy demand elsewhere are now satisfying demand in the United Kingdom. Therefore, it is deceptive to blame present conditions on the collapse of demand.
The Secretary of State has taken great credit for what must be described as the Varley package—namely his announcement last week, or the week before, of four or five measures. Like the Prime Minister's measures in May, they were directed to the wrong difficulty. The Prime Minister said that a great deal of public money was to be made available for modernising the industry, but everyone knows that on the whole the industry is pretty modern already. In the Varley package we have £20 million devoted to the clothing industry, but dishing out public money is not really what the textile industry wants. It is something that my colleagues and I think is entirely wrong in the present circumstances of public expenditure, even though it may assist some of our constituents. To dish out public money in such a manner means either borrowing, printing or taxing. As it is not essential to take such a course, I do not think it is right to do so.
It is said that by giving the clothing industry £20 million we shall help the textile industry in its present troubles. I beg leave to doubt that approach. On 31st July a distinguished expert in these matters, Mrs. Dorothy Slack, of the Department of Management Sciences at the University of Manchester, pointed out with considerable force that it would be a very long time before any of the £20 million had an effect on the textile industry, by which we mean spinning, doubling, weaving, finishing, dyeing and


all the other processes. That applies to man-made fibres as well as to cotton or wool.
Mrs. Slack explained that the problems of the United Kingdom cotton and allied textile industries are of a different nature socially, and not only technologically, from the clothing industry. She believes that the textile industry needs immediate and direct help if more closures and unemployment are not to come this winter, whereas the only effect of pouring this money into the clothing industry is at best medium and probably long-term. The social consequences of contraction in the textile industry are clearly serious and cause great domestic upset. It appears that in clothing the transition to other jobs is easier.
Labour turnover is high, and the basic problem in many sections of the clothing industry is a shortage of labour. It seems that the wrong instrument is being applied at the wrong time and in the wrong place to cope with the crisis that the textile industry faces between now and December. I hope that the Secretary of State will appreciate that although people are always grateful for £20 million, it seems to be extremely misplaced and misdirected if the object of the exercise is to save a couple more mills going out next week, which may well happen, given the great spread of under-employment and unemployment in the textile industry.
On the subject of dumping and retaliation, the Government—perhaps for the first time—face a real life anti-dumping application. We are always being told that nobody will bother to make these applications or that they do not take advantage of a Government which stands ready to assist. However, the Government are now faced with an application against not an Asiatic, African or Caribbean source, but against Italy. This relates to the Prato wool concern in relation to which there is no observable relationship between price and cost and which is opportunistic in its pricing. Prato has quoted prices which are impossibly low—and indeed much lower than the cost of production. This is an application from an EEC associate.

The Under-Secretary of State for Trade (Mr. Eric Deakins): The hon. and learned Gentleman mentioned a number of factors and suggested that there is

dumping, but although his remarks may indicate unfair competition or subsidised competition, they do not indicate dumping.

Mr. Fletcher-Cooke: Then it is time they did, and it is time that the dumping regulations were altered. I am drawing attention to the fact that a fellow member of the EEC is able to set a price that is grossly opportunistic in character, with no observable relationship between price and cost. So much the worse for dumping regulations, and it is time they were changed. It is time that the initiative was taken not merely unilaterally by the industry concerned but by Her Majesty's Government in Brussels against a fellow EEC member. There should be much better machinery to deal with this situation. I am disturbed that this rare dumping application faces rejection on the ground that it does not qualify.
On the matter of retaliation, the Secretary of State mentioned Turkey. It is natural that countries will retaliate if they are singled out. The trouble with that example was that Turkey and Greece were singled out for special treatment. I am not saying that it was wrong but that it was invidious to the countries concerned. The more general form of protection does not involve invidious treatment. It is by no means proved that, if there is no retaliation against an individual country and if the displeasure is spread more widely, there will be retaliation. Australia banned some clothing imports over a wide area of origin. Other considerations are also involved. In many cases countries have imposed temporary bans or reductions to avoid the problems which we now face. I am told that the Australians have not suffered retaliation.

Mr. Edward Lyons: Does the hon. and learned Gentleman agree that the 10 per cent. import surcharge which was imposed a few years ago provoked some retaliation? One engineering firm in my constituency suffered retaliation in Sweden from the Volvo company which amounted to a loss of £100,000 in orders while the import surcharge remained in force.

Mr. Fletcher-Cooke: No doubt that was the case. However, that surcharge was imposed not to help an individual industry but to apply across the board.


Such a course would be much more objectionable. It may be possible to pray in aid the usual escape clauses, but in that case the surcharge was imposed in a clumsy illegal manner.
I would not regard the present problems as insuperable. I agree that there is a danger of retaliation, but I do not believe that it is as great as the danger of doing nothing. The danger of doing nothing at present will result in the end of the textile industry. Therefore, I suggest that the argument of retaliation is not sufficient when considering whether one should take some action or no action.
Burden sharing is a good concept and many of us have great hopes on that score, but we fear that it applies only to the element of our imports which is on the increase. In other words, it applies only to the situation where there will be a greater percentage of imports in the future, even though they may be regulated and even though the United Kingdom will not take many more imports. The increased burden will need to be shared, but this is a complicated matter and the existing degree of imports may not be affected.
It is difficult to say these things to one's constituents. The concept of burden-sharing should apply across the board to all imports whether they are increasing or existing. We must work to that end. I hope that the Minister in reply will say something about burden-sharing. I gather that Europe is to take in a number of Taiwanese imports, and I know that we have had similar imports in earlier years. If I am wrong on that point, I know that I shall be corrected. I hope that we will shall be given more information on the provisions which are before us and I hope that we shall be given a little more information on the EEC documents.
We welcome the debate and we always listen to the Secretary of State for Industry with pleasure. However, on the question of textiles he has not so far given us very much joy. The "Varley package" is similar to an egg, parts of which are good and other parts not much good at all. We look forward to what is to come later.

Mr. Deputy Speaker: Mr. Speaker has already made an appeal for brevity in

speeches. I should like to reinforce that appeal by pointing out that 30 hon. Members wish to take part in this important debate. There now remain 180 minutes before we reach the Front Bench speeches. A simple calculation shows that hon. Members will need to deliver their comments in six minutes to enable all to take part. My experience in the Chair leads me to believe that if an hon. Member wishes to do so, he can make his comments within a speech lasting only six minutes.

8.0 p.m.

Mr. James Lamond: My right hon. Friend the Secretary of State for Industry has indicated tonight his appreciation of the difficulties facing the textile and footwear industries. It is a pleasure to welcome him here tonight, and I am sure that he will listen closely to what is said about the industries concerned.
He said that the difficulties in the textile industry are due to a world recession, and that is absolutely correct. But that is only one factor causing the present depression. There is also the cyclic depression which there has always been in the textile industry, and which is superimposed on top of the world recession. There has been considerable destocking by big clothing retailers and others which has affected the output required from the mills. There are, therefore, three elements, all of which have depressed the industry.
It is rather difficult to define the textile industry, but, taking the figures from the British Textile Confederation brief, one sees that there has been a drop of 47,000 employees in the textile and clothing industry in the 10 months between July 1974 and May 1975, equivalent to over 5 per cent. of the total number of employees in the industry. Many of these employees will never return to the textile industry, so that, even if there is an upturn in trade, there will be difficulty in recruiting employees to take advantage of it.
Textiles play an important part in the economy of the North-West of England. The North-West Region's share of the country's population in 1973 was 12·1 per cent., but the region's share of all unemployed workers in June was 16 per cent., so that already in the North-West there is


an unfair share of Great Britain's unemployment.
It is against this background that we are fighting the textile recession. This is another factor which leads hon. Members from the North-West who speak here tonight to express their feelings rather strongly.
On 23rd July 1975 we had a statement from the Secretary of State in which he made seven points. He has defended that statement tonight in detail. He mentioned that many of the points were raised at the request of the British Textile Confederation. I accept that completely, but what he did not mention was that the British Textile Confederation was also pressing most strongly of all for import restrictions. I am sure that the confederation regard this as the most important element of the package that we are proposing, but that element was omitted from the package announced by the Secretary of State.
In listening to the Secretary of State one would have thought that the demands of the British Textile Confederation have been met almost in full, and that they would be very happy about what was announced. In its Newsletter No. 22 of 1st August 1975, after describing the package, the confederation goes on to say that, following the Secretary of State's announcement,
the BTC issued a statement which welcomed the measures but regretted that they would clearly have little effect in the short-term on the problems of the industry in the present recession.
This is an important point which has not been fully grasped by the Department of Industry. We are looking for a short-term remedy. The proposals that have been announced will no doubt be beneficial in the long term, but in regard to the immediate desperate short-term position facing the industry the package really contributed nothing.
I still strongly support import control. The industry, which has always been reasonable—it has more bodies combining trade unionists and employers than most—has come forward with alternatives. The industry has racked its brains. Many of the 800,000 employees are staunch Labour supporters and do not want to embarrass the Government if they can avoid it. They want to put

forward proposals which they think will be constructive and helpful.
I know that the Amalgamated Textile Workers' Union has written to the Minister proposing alternatives to import control because it realises the Minister's difficulties. I sympathise and can see the overall picture on the grand scale in which import controls can only be detrimental to this country's trade at the end of the day. I accept that, and so do the textile unions in the long term. They have suggested, among a number of points, the setting up immediately of a textile purchasing agency.
This is an idea which was mentioned in a pamphlet entitled, "Plan for Cotton", written by the Prime Minister in 1953 or 1954. I suggest that the Secretary of State should examine this idea very carefully. I believe that it is more of a long-term solution. There would be some delay in setting up the agency, and some delay before the effects of it were felt.
Turning again to import controls, I believe quite honestly that the situation in this country generally will force the Government to change their policy on this matter. There are increasing demands for it. We are hearing them, for example, from the motor car industry, which is very disturbed indeed by the imports from a number of countries, including Japan. These matters will force the Government, perhaps quite soon, to change their mind on imports. I believe that they will grasp the point that we have been making.
In order to save the textile industry we want short-term measures to be taken. There is perhaps not enough pressure on the Government to carry out what we ask, but the pressure is growing, and in order to save industry as a whole in this country it may be necessary in the very near future to introduce across-the-board import controls similar to that mentioned earlier—the 10 per cent.
Those interested in the textile industry will be increasing their pressure on the Secretary of State to make sure that something is done. If import controls are introduced to help any industry—the motor car industry or any other—we shall certainly seize the opportunity to widen the gap that will be opened by that move and to make sure that textiles are given a chance to survive.


If the Secretary of State does not act, or if the Government do not act, the textile industry of this country will disappear in the very near future.

Mr. Deputy Speaker (Sir Myer Galpern): I am most grateful to the hon. Member for Oldham, East (Mr. Lamond) for taking only eight minutes. If that example is followed it should be possible to give every hon. Member who wishes to speak the opportunity to do so.

8.9 p.m.

Mr. John Davies: I shall seek to emulate the hon. Member for Oldham, East (Mr. Lamond) in the matter of brevity. I have several interests in the textile industry and the footwear industry but I shall address myself solely this evening to that part of the business which is concerned with the Community instruments.
They are two exceedingly interesting instruments, although each of them is small in its individual effect. They are interesting for the very reason put forward in the report of the Scrutiny Committee recommending that they should be the basis of a debate on textile matters within the Community. Incidentally, I might point out to the Secretary of State that we would not be happy to feel that this general debate counted as discharging the House from its obligation to discuss the textile industry within the framework of the Community, which is a quite separate and wider subject. I hope that that view will be conveyed to the Leader of the House.
The two instruments are very interesting in that one is obviously an extension of the right of import in what is a traditional area of textile manufacture in a certain number of exceedingly poor countries, whereas the other—the Taiwanese one—is clearly a restraint on imports into the Community framed within the broad understanding and intent of the MFA, though not linked specifically to it.
These two contrasting instruments illustrate the contradictory problems which have faced Governments for many years. They have an obligation, from a humane and moralistic point of view, to absorb part of the textile outputs of developing countries which may constitute its prime employers. For that reason, the developed

countries have sought to find means of giving access to textile imports. On the other hand, they face the contradictory aspect that they are themselves greatly concerned about the size and content of their textile industries. In our own country, it has enormous importance and great traditions. It is still a very big employer. So we live in this tightrope atmosphere in dealing with the industry.
If we look at the various steps taken by successive Governments, we see that they have varied or continued the concessions. They have moved from a period in which they allowed greater imports to a period of greater restraint. This has been the perpetual pattern.
The illustration afforded by the two instruments is well worth bearing in mind because, although what the hon. Member for Oldham, East said must be correct that there is a real serious short-term problem, there is as well a long-term one. We must realise that it is not only industrial nations like ourselves but the developing countries which rely on this industry. Therefore, we must keep a sense of proportion.
The Secretary of State reminded us that the Multi-Fibre Arrangement which came into force last year has provided a vehicle for good developments. The Community, as the negotiating element in external commercial agreements, has the task of putting into effect the broad framework of that agreement in specific cases. It has been very slow in getting at it. I do not say that critically of the Community. The people with whom it is dealing are not themselves anxious in many cases to see this brought into urgent and immediate effect.
If anything longer term should be done by the Government, it should be to press and press the Community to bring these agreements to fulfilment. We are content to see what has been achieved with Hong Kong. It is a real step in the right direction. But on these agreements, as they are contrived, hang the real burden-sharing possibilities to which this country can look forward.
In reconciling the two diverse interests of the developing countries and of our own industry, our country has been hit very hard. We have been the great facilitators of imports of textiles from the developing countries, from our former Colonies and from our Commonwealth


partners. But we must look for a greater sharing of the burden, and that purpose can be achieved provided that the Community presses forward as quickly as possible the concluding of the various agreements that it needs to make throughout the world as a result of the MFA.
Therefore, if there is one message that I should like to leave with the Secretary of State it is that he should leave no stone unturned to ensure that the Community presses forward and thereby allows him to negotiate to secure a reasonable apportionment of the load that we have to bear with our colleagues and neighbours in Europe.

Mr. Deputy Speaker: The right hon. Member for Knutsford (Mr. Davies) undercut the hon. Member for Oldham, East (Mr. Lamond) by one minute.

8.16 p.m.

Sir Geoffrey de Freitas: I should have liked to take up many of the comments of the right hon. Member for Knutsford (Mr. Davies) in discussing the Commission documents. However, in the few minutes available to me, I wish to concentrate on footwear, which also features in the title of this debate. I have no doubt that my neighbour the hon. Member for Wellingborough (Mr. Fry) will wish to do the same.
According to official figures, in my constituency there are approximately 59,000 people in paid employment. The biggest single industry is steel, employing 13,000. The other 46,000 are spread over many industries and services. But the largest group of 8,000 are employed in the textile and footwear industries, 5,000 of them in the footwear industry.
The National Union of Footwear, Leather and Allied Trades and the British Footwear Manufacturers' Association point out frequently that in the country as a whole during the 12 months between 1st June last year and 1st June this year more than 7,000 workers left the industry. The official unemployment figure in the industry on 1st June was 2,500. But that is not all, because one-third of the workers are on short time.
Kettering is traditionally a footwear town. It is the home of some of the famous names in the industry. It is also the home of the Shoe and Allied Trades Research Association, which is the

Western centre and probably the world centre for footwear research.
Naturally, any decline in this industry is of great importance to the people of Kettering and to its Member of Parliament, and there is a serious falling away of demand in the home market for British footwear. What worries the industry especially is imports—whether dumped or at artificially low prices—from Czechoslovakia, Poland and Romania.
In recent years, these countries have been exporting men's footwear. Now they are increasing enormously their exports of women's and children's footwear, again at artificially low prices. In the first six months of this year, the position was so bad that those countries' exports of women's and children's footwear at these artificially low prices—a new venture for them—were greater than the whole of last year. I ask what the Government intend to do about this problem.
The workers and manufacturers in my constituency fear that the capacity lost in the recession will be lost permanently and that, when there is more purchasing power, we shall not have the capacity to supply it, with the result that it will be a power to purchase more and more imported footwear.
I emphasise that at all times the footwear industry, both employers and workers, is confident that it can meet fair competition, as it meets it from the Common Market countries. It meets it because it is a competitive industry. But it cannot meet it when the competition comes from footwear which is dumped or imported at artificially low prices, as happens today with footwear from Czechoslovakia, Poland and Romania. These imports are a menace to our standard of living and to the future of our industry. What are the Government going to do about imports at artificially low prices?

Mr. Deputy Speaker: I know the hon. Member for Rochdale (Mr. Smith) was present when I made my appeal for brevity.

8.21 p.m.

Mr. Cyril Smith: This is our third debate on the textile industry this Session. I compliment the Secretary of State on being here. As far as I can


remember, he is the first member of the Cabinet who has had the courtesy to attend one of these debates, but that is the only crumb of comfort I can offer him in my speech.
The two Government statements in recent months have been pathetic, useless and ineffective. Successive Governments have stood by while the textile industry has bled. We had expected better from this Government, but they have followed the pattern set by their predecessors. The textile industry is highly modernised, has an excellent record of industrial relations and plays a full part in helping the economy with its exports. With a total work force of 900,000, it is the third largest productive industry in the United Kingdom. We are demanding that it should have at least the same consideration as is afforded to other industries which receive massive hand-outs and help from the Government.
I could quote import statistics at length, but I want to respect the Chair's wishes about the length of speeches. The Secretary of State quoted the 1973 import figures from India, but what about the 1975 figures? India exports 4,590 million tons of textiles to West Germany, 3,836 million tons to France, 1,000 million tons to Italy, 1,687 million tons to Benelux, 136 million tons to Ireland and 866 million tons to Denmark. Yet the imports to the United Kingdom total an astonishing 22,825 million tons. There is nothing fair about this situation. There is no spread over the other countries in Europe. It is this sort of situation that is causing great concern in the trade.
I am in favour of assisting underdeveloped countries, though I have some reservations about assisting those that seem to be proceeding on Fascist lines, but this is Father Christmas gone mad. It is time the Government stopped playing the rôle of Father Christmas in this way.
The hon. Member for Oldham, East (Mr. Lamond) referred to a letter sent by the textile unions to the Prime Minister on 29th July. I regret very much that the unions only saw fit to send a copy to Labour Members, but I have been able to obtain a copy from another source.

Mr. James Lamond: I apologise to the hon. Member. I received copies of the

letter from the unions in my capacity as chairman of the all-party textile group.

Mr. Smith: I withdraw the point I was making, accept the explanation and apologise to some of my union friends who are listening to me.
In that letter, the unions suggested that a textile purchasing agency should be established. That might be a far better way of spending the £20 million which the Secretary of State is prepared to make available to the industry than the way now proposed, which may prove to be money down the drain. The help will be too late by the time the industry is able to take advantage of it. The unions' idea is worthy of investigation and support. I very much hope that the Minister will be able to comment on it when he replies. Hon. Members concerned with this problem have called before for import restrictions and controls, and I do so again.
As a Liberal, one of my basic beliefs is in the philosophy of free trade, but free trade can succeed only if everybody is playing to the same rules. It cannot succeed if some countries are playing to one set of rules and other countries play to another set. Many people believe that the Civil Service has played a major rôle in persuading the Government against import controls. To many of us the Civil Service is like jellied eels—wet, soggy and slippery. I ask the Government to have the courage of their convictions in this matter. If we are to have free trade, we want fair trade, but we are not getting that at the moment.

Mr. Richard Wainwright: As Liberals we have always been against monopolies, and that is what the Italian manufacturers would establish if they continued with their disruptive trading tactics.

Mr. Smith: My hon. Friend has made his point well.
In a Government statement on 23rd July reference was made to dumping. Those of us who have been concerned with the problem of textiles over many years did not know whether to laugh or cry.
In 1966 I led a deputation of Lancashire mayors to the President of the Board of Trade. [HON. MEMBERS: "Were you a Labour mayor?"] No. By


then I had resigned from the Labour Party, but it was a Labour President of the Board of Trade, the right hon. Member for Battersea, North (Mr. Jay). Ten years later we are still pleading for the same remedies. Dumping 10 years ago was a problem just as it is today. It is time Ministers at the Department of Industry gave the impression that they are on the side of the textile industry on the question of dumping instead of on the side of the Civil Service. Can we not get our embassies abroad to play a part in helping us to prove dumping? We always feel that it is impossible to meet the criteria required to prove dumping.
I ask the Government to restrict imports. I am prepared to stand by that statement, whatever some of my Liberal colleagues may feel about it. [Hon. Members: "You are the Whip."] That is the advantage of leading and not having to follow.
Secondly, the Government should give serious consideration to the establishment of a textile purchasing agency as suggested by the unions. These steps are urgent. In my constituency in the last 14 days one cotton mill closure has already been announced. My constituency has a higher percentage of employees in textiles than any other constituency. For my constituents, the plight of the textile industry is a very serious matter. In the last three or four hours I have heard of more mills being put on short time over the next few weeks.
If the Government fail to act this time they will be judged to have followed the pattern of all previous Governments. They will be judged to have produced words but no effective action. The textile workers of Lancashire will be entitled to believe that this Labour Government have ratted on them. They will believe, rightly, that this Labour Government have proved to be the same shower as every Government that have gone before in the handling of textiles.

8.31 p.m.

Mr. Thomas Torney: I only hope that the impression that I and some of my hon. Friends seemed to create in securing this debate by our little argument a couple of weeks ago will be similarly effective upon my

right hon. Friend the Secretary of State when we make clear to him that we are not satisfied with his refusal to introduce import controls. I believe that to be the view of all hon. Members, regardless of party, who have textile interests in their constituencies.
I am concerned with woollen textiles and to some extent with man-made fibres. It is with those that Bradford, part of which I represent, is predominantly concerned. Our predominant interest in those spheres means that we are facing short-time working, massive redundancies and threats of mill closures.
Textiles are the largest industry, almost the only main industry, in Bradford and similar areas in the West Riding. This means that when we are faced with redundancy, short-time working or mill closures the workers are thrown on the scrap heap. There is very little alternative employment to which they can turn, except for the service industries. I was involved in distribution before I came to this House and I am qualified, therefore, to say that service industries are absolutely dependent on the basic industries in an area because they provide the workers with the money to spend in the shops. What hope is there, therefore, of textile workers gaining employment in the service industries?
Various sectors of the textile industry are highly interdependent. My hon. Friends who represent Leicester constituencies know only too well how their constituents are affected when Marks and Spencer does not buy some of their knitted made-up goods. But my constituents in Bradford are also affected because we supply much of the woollen and man-made fibre yarns which Leicester uses for the made-up goods.
This is a convenient point to state something which might not have been seen by all hon. Members last week. It was the announcement by Marks and Spencer, one of the most loyal purchasers of British goods for its chain stores, that it is to cut its purchasing by 10 per cent. Other stores, perhaps not so loyal, might well follow suit. When that 10 per cent. cut filters down to the factories which produce the made-up goods and further down to the producers of yarn in Bradford, there will be more unemployment.
My right hon. Friend the Secretary of State must tell the Cabinet that there


must be a reversal of policy on import controls.

Mr. Douglas Hurd: Will the hon. Gentleman and his colleagues accept that the situation is more complicated than he has described? There is, for example, one section of the textile industry—the blanket industry—which is concentrated partly in his area of Yorkshire and partly in my constituency. The people concerned in that industry are worried about the prospects of import restrictions for the reasons given by the Secretary of State. They fear that retaliation will affect the flourishing export trade in blankets.

Mr. Torney: We all know that there is fear of retaliation. I should like the Government to find out just how much retaliation we are likely to get. We are not willing to accept a bland blanket statement that retaliation stops us having import controls. We want the Government to look deeper into the matter, and especially into the prices of suits that are being imported from Romania, Hungary, Poland, Czechoslovakia and East Germany. If they are woollen they vary between £8 and £10 per suit, and if they are made of man-made fibre they vary between £6 and £9 per suit. These are not fair prices.
Our industries are efficient. They have recently been brought up to date under the recommendations of the Atkins Report. They make some of the finest textiles in the world. We welcome fair competition. We can compete with fair competition. There is a lot more that I should like to say, but with an eye on the clock I shall sit down. However, I ask the Minister to take this matter seriously because the jobs of our constituents depend upon it. We want the Minister to do something about controlling imports. Never mind what was said about blankets. We want some import controls.

Mr. Deputy Speaker: I express the gratitude of all hon. Members who wish to take part in the debate.

8.37 p.m.

Mr. Robert Boscawen: I add my support to the concern expressed by the right hon. Member for Kettering (Sir G. de Freitas) about the position of the

footwear manufacturing industry and its work force. As I represent the headquarters of a large footwear organisation in Street in my constituency, hon. Members can imagine how important this matter is not only to my constituents but to people in other areas in the Southwest where there are factories belonging to this organisation. There are also many other people whose livelihoods depend upon the prosperity of this main manufacture in these areas in which they live.
It is clear that there has been a signicant rise in imports in recent years taking an increased percentage of the home market. I want to question, however, whether the Minister believes that this is the major cause of the trouble in the footwear industry. Looking at imports as a percentage of the home market, it is perfectly true that they have risen significantly in the past few months, but not by a great amount—I understand that 5·3 per cent. is the total increase in terms of footwear of all types imported into the United Kingdom during the five months January to May this year. I do not disagree that where there is dumping effective action must be taken. I do not accept that the Government have done nearly enough against what is being regarded as dumping by the industry from the COMECON countries. The agreement that they have achieved for a reduction of exports to this country from those countries of between 5 and 10 per cent. is not nearly enough.
However, that having been said, I wonder whether we are concentrating too much of our attention on the effect of cheap imports on the shoe manufacturing industry. Certainly the decline in its trade has stemmed from a reduction in home demand and from the destocking of the retail side of the industry and so on.
We must also look seriously at the competitiveness of this industry, especially in export markets. That is of crucial importance at present. Why, for example, does our industry find it extremely hard to sell shoes quality for quality in the United States and North America generally, where there has been a substantial fall in our exports in recent months? Does not this point to the fact that the recession in the industry has much to do with the general rate of


inflation in the country? Are not the underlying troubles facing the industry characteristic of much of what is wrong with industry in general in the United Kingdom? We would be foolish to disregard that factor.
Despite increased efficiency and productivity in the footwear manufacturing industry of about 2½ per cent. to 3½ per cent. over recent years, we have been pricing ourselves out of world markets for other reasons. This is a disturbing matter. I hope that the Minister will look at some of these points.
One disturbing factor is continued wage-induced inflation. Of course, that is not confined only to the footwear manufacturing industry. However, the effect of the latest measures will be very small. The industry employs a large amount of female labour—over 50 per cent. in many factories. Many other wage agreements were reached prior to the latest measures being introduced. Therefore, wage costs in the industry will continue to increase by about 20 per cent. in the next year.
Another disturbing factor is that, during a period of recession, costs rise substantially if an industry is unable to reduce its labour force. It is right that whole factories should not be closed as in the past, but we must recognise that this goes against the competitiveness of an industry in world markets.
Yet another factor which has increased the burden on different industries during recent years has been the amount of the "take" by the Government and local authorities. Right hon. and hon. Gentlemen on the Government side bear a considerable responsibility in that direction. They came into office over a year ago determined to squeeze more gold out of the golden goose of private enterprise almost to the point of choking her. That trend must be reversed. If we are to have healthy textile and footwear manufacturing industries the Government's "take" must be reduced, especially when those industries are under pressure from foreign competition. I hope Labour Members opposite will take that point on board.
It is true that the Government have recanted over corporation tax in relief on the replacement of stocks, but other costs are catching up. For example, the

increasing general rate demand is a very substantial item in those costs. Until this squeeze is mitigated we shall not see the recovery that we want in the footwear manufacturing and other industries.
I do not think that the solution lies in a massive cut in imports or in hand-outs and grants to improve research into efficiency and marketing. Of course, some of that will help. Neither does the solution lie in more bureaucratic imposition of improved standards for footwear and so on by the Department of Prices and Consumer Protection. The real solution lies in the Government giving more encouragement towards the entrepreneurial zest, of those who are determined to keep the industry going and who want to make it a success and in helping and co-operating with them and listening to their advice to a much greater degree.

8.45 p.m.

Mr. Dan Jones: I have in my constituency footwear factories as well as textile mills, but in view of the time schedule that you, Mr. Deputy Speaker, have applied, I shall omit reference to footwear. Instead of the four points which I had proposed to make I shall restrict myself to two.
First, I shall deal with the human problem because in North-East Lancashire, of which Burnley is the centre, no fewer than 1 million people have been lost from the textile industry within a lifetime. In addition, in common with the rest of the textile industry, it has been probably the most stable industry in this country. If the rest of industry in this country had the same pattern of built-in stability as the textile industry, this country would have no economic problems. I want the Government to address themselves forcefully to this point. I mean it and I say this challengingly. It is very sad that people who have given so great a part of their lives should now be treated in this manner.
I turn to my final point on the subject of labour. There is a substantial number of people in the age group 55 to 60. Unless action is taken quickly these people will never return to any industry, never mind the textile industry. They have reached a point where, unless action is taken quickly, they will go into an industrial graveyard. There is much more that I should like to say, but I


must keep in mind the undertaking to which we have been asked to adhere.
My second point relates to the forms of remedy. Understandably, many of my hon. Friends believe that import restrictions could be the answer. I am mindful of the fact that the Prime Minister, together with the American President, entered into a contract. I could be wrong, but if the Prime Minister rats on that contract, his credibility in international relationships will be at an abysmal low.

Mr. Mike Noble: Will my hon. Friend not agree that the Government entered into a social contract, that we are now in phase two of that contract, and that included in that contract were employees in the textile and footwear industries? Will he agree that so far we have not fully honoured our obligations to them?

Mr. Jones: If the Prime Minister believes that he can go back on his undertakings to President Ford, I give the firmest possible assurance that I should not persuade him to do otherwise.
There are four points that the Government can take up, three of which are fairly mundane. However, one is rather revolutionary but I should like to argue it. I am certain—and I speak from experience—that the directive to the publicly-owned industries to buy in this country could add a substantial contribution to the productive capacity of the textile industry. I am convinced of that beyond any shadow of doubt.
I also believe that there should be a ruthless examination of dumping in this country because my common sense, quite apart from my experiences, indicates powerfully that the second load would not be dumped if the first load had not been paid for. As a consequence, this matter needs to be examined.
I refer to the "burden sharing" scheme of the EEC. The Minister must take the textile trade unions and the British Textile Confederation into his confidence. During the referendum I wrote to a number of people who are vitally interested in the textile industry in relation to the EEC. I received assurances that membership of the EEC would be of substantial value to the United Kingdom textile industry. This has not

happened and, therefore, the situation needs to be examined.
I should like to bring to the attention of hon. Members a discussion between the chairman of the Retail Consortium, Lord Redmayne, who is well known to this House, and the British Travel News. Lord Redmayne was once a Conservative Member of Parliament and at one time was the Conservative Chief Whip. British Travel News asked Lord Redmayne this question:
Lord Redmayne, you are the Chairman of the Retail Consortium. Could you briefly describe what the Retail Consortium is?
Lord Redmayne replied:
Yes, it's an 'umbrella' organisation for eight major trade associations in the retail trade. They are the Retail Distributors Association, the Co-operative Union, the Multiple Shops Federation, the National Chamber of Trade, the Mail Order Traders Association of Great Britain, the Retail Alliance, the Scottish Retail Federation and the Multiple Food Retailers Association.
There is no reason why these people cannot be brought into consultation with the Government, the confederation and the textile trade unions in order to find out how much of their purchases could be diverted to British-produced goods.
No single point represents a panacea, but the four points I have put would make together a substantial contribution towards solving the problem. Tomorrow, we are to meet the biggest textile distributors in the country. Present will be representatives of the confederation and the textile trade unions, as well as hon. Members from both sides of the House. We shall be discussing ways and means of buying British textiles to a greater quantity than at the moment. But the truth is that our efforts have their distinct limitations. Unfortunately, the Government will not be represented at the meeting.
We believe, however, that this is a constructive approach and we mean to continue with it. I believe passionately that, at least for the next 12 months, my right hon. Friend the Prime Minister should appoint a Minister specially to deal with the textile industry. I believe that such an appointment would pay substantial dividends. Why should he not do so? The Government have set aside £20 million for assistance to the industry, and I believe that a Select Committee of the House could work with a Minister


for textiles in helping to monitor the work done.
I am convinced that if the proposals I have put were accepted we could, in the foreseeable future, bring about a situation much more satisfactory than the present one.

8.53 p.m.

Mr. George Reid: In six minutes, I can only hope to put a Scottish gloss on the arguments of hon. Members during this debate.
I listened to the Minister's opening remarks with a growing sense of dismay. There seems no real awareness in the Government that the recession in the textile industry is the gravest since the 1930s. There appears to be no real appreciation that the industry could suffer continuing and irreparable damage unless steps are taken to ensure its survival.
Many companies are currently working at a loss. Many firms are finding that their reserves are being eaten into, along with their capacity to resume normal working, and all that that implies in terms of impairment of funds for restocking, increased wages bills and working capital. With a reduced cash flow, even firms with relatively high liquid reserves, let alone those with large stocks and little or no liquidity, will eventually reach the point where they must close down.
The Minister's statement of 23rd July, apart from providing increased surveillance, will do little to help the industry. It is the largest single employer of labour in manufacturing industry, and I therefore find the Government's attitude astonishing. As a nationalist I sympathise with the people of the North of England. I am sure that the people of Lancashire, for example, will deliver their own judgment on the Government in due course.
I wish to make three quick points. First, I regret, as does the textile industry in Scotland, the fact that the Government have turned down the request of all sections of the industry to reduce imports of textile cloth for one year by 20 per cent. The Minister must know that that would mean a saving of £220 million on 1974 figures. Italy, in a comparable situation, introduced an import deposit scheme which was accepted internationally and by the EEC. It had a remedial effect and there was no retaliation. If it worked

there, why should it not work in this country?
Secondly, I want to look at a consequence of the channels of distribution in the retail industry in the United Kingdom being extremely highly developed. The United Kingdom market, therefore, is the first target of any foreign industry seeking an outlet for its excess products. We have seen that happen with Comecon products and imports from the Far East and Italy. But what of the increased surveillance measures which were introduced—some six weeks after action by the Irish Government? Will they work? Last year's experience showed that imports of some products were passing the ceiling without any action being taken. Trade organisations were told in September last that quotas were being exceeded in the second quarter. Let us hope that that does not happen now.
I also have certain qualifications about the MFA, and the flaws in it. Under that arrangement imports have to be given annual growth rates. I believe that there should be a recession clause under which growth rates can equal a nil situation or even a minus situation when the market shrinks, as in the present United Kingdom recession.
Thirdly, I want to comment on the knitwear industry in Scotland, which is of high quality, and exports 38 per cent. of its products by value and 31 per cent. by volume. This week I asked Scots knitwear manufacturers what they wanted from the Government. They said they do not want talk of more buildings, more machinery or more equipment. All of that is fine and they are perfectly efficient. They do not want subsidies to build up stocks because different colour permutations and volatile overseas buyers would make such action commercial folly. They do want direct Government assistance to help them to sell their products overseas.
The Minister will be aware that I have recently spoken about pre-shipment finance. A few months ago, the Government introduced changes in insurance cover by the Exports Credits Guarantees Department for the export of capital goods which take a long time to manufacture. Why should not similar assistance be given to exporters of finished textile products? The effect would be to enable manufacturers to get insurance


cover and favourable borrowing facilities for the purchase of raw materials such as yarn in anticipation of exports.
As a practical proposition, orders placed by a foreign purchaser in February may often not be required until the end of the following September. In the meantime the Scots manufacturer has to pay the spinner and make other purchases as well. On 23rd July last the Minister said that this was a serious matter. How serious is "serious"? Tonight he said he would give the matter urgent consideration. How urgent is "urgent"? If, as the Minister suggested, there are difficulties with the clearing banks, could not the House know what those difficulties are?
My party believe that the Varley package has been the wrong instrument applied at the wrong time in the wrong place. Tonight the Minister made noises of sympathy. He had better beware that he is not shortly uttering noises of condolence. He asked for time for the industry to adjust. He should not wait too long for an adjustment period or he may well find there is no industry left.

8.59 p.m.

Mr. William Whitlock: There can be no doubt that everywhere in the United Kingdom the textile industry faces a sharp decline, in which there are increasing redundancies, short-time working, factory closures, a lack of liquidity, declining order books, falling stocks and a failure to replace normal wastage in the work force by new recruitment. We are experiencing all those things in Nottingham in an acute form. It is no exaggeration to say that many firms are fighting for survival.
It cannot be said that the textile industry has priced itself out of the home market. I was going to quote figures, but in deference to the Chair's request for brevity. I shall not do so. It cannot be said, either, that the unions in the textile industry are being anything but responsible in their attitude to wage demands. It is evident that their attitude reflects a knowledge of the seriousness of the position of their industry and the fact that it is fighting for survival.
What is wrong is not the attitude of the firms or the employees but the problem of low-cost imports. Therefore, we must look as never before at that problem. I

hope that in spite of what my right hon. Friend the Secretary of State for Industry said we shall do so.
We in Britain have for too long unfairly borne the load of taking in imports from developing countries. That has belatedly been recognised, but not yet adequately recognised by EEC countries and others.
Some three years ago, when I was pointing out in the House that our ponderous anti-dumping legislation was much less effective than that of other countries, I urged the Conservative Minister of the time to thrash out an anti-dumping procedure which would be good for Britain and for British industries, and to use that as a base from which to thrash out possible future policies within the Common Market, rather than supinely to accept Common Market arrangements dictated by countries which had never allowed the penetration of their markets by foreign textiles in the way in which successive Governments had allowed it to happen here. But, alas, that Minister seemed to think that there was no great problem for the textile industry. We are suffering from that complacency today.
It is evident that the Government's proposals to help the textile industry have not been received with any marked degree of warmth within the industry, because their impact will be long term, whereas the difficulties of the industry demand help now, before it is too late. The Government are like a doctor preparing medicine for an ailing patient who may die long before the medicine starts to take effect. I want the Government to be more rapidly effective in their ministrations than they have been so far. I hope that that will happen.
One industrialist has written to me saying:
We do not want this £20 million to re-equip. If the Government has £20 million of the taxpayers' money to give away to the textile industries, then the best thing it can do is to buy up second-hand machines from British plants which are re-equipping and break up that machinery rather than to allow it to be exported to other, low-cost countries who will then make textiles and send them back here and put our own people out of work.
I do not know whether he meant that, but one can say that the kind of sophisticated Luddism which he was advocating was born of the same kind of bitterness and despair as that which motivated the


original Luddites who smashed up frames in Nottingham in the last century.
It can be said that the answer to the threat from abroad is to perfect new and more sophisticated machinery which will put us into a competitive position even to deal with imports from Korea. The managing director of one of the firms in Nottingham, whose goods bear a household name, has told me that his company is preparing to do just that. But two years are required to develop those machines. Therefore, a respite is needed for the industry until those new examples of British engineering skill and inventiveness emerge.
I hope that the Government will provide that necessary respite to enable the brave new dawn of the textile industry to break in this country rather than a dawn of increased bitterness and frustrated hopes.

9.5 p.m.

Mr. Peter Fry: I hope that the hon. Member for Nottingham, North (Mr. Whitlock) will not mind if I do not refer to his remarks, in view of the shortness of the debate. I shall restrict my remarks to the footwear and leather industries, which are the main employers in much of my constituency.
Before looking at the present difficulties, it is only fair to point out that in recent years there has been a gradual reduction in the number of firms and employees. The traditional pattern of trade has been one of seasonal ups and downs, which have tended to make the shoe workers and employers a little more philosophical and less militant than those employed in some other industries, who seem to believe that the world owes them a living and that if the world will not pay for it the British taxpayer should. I hasten to say that my constituents are not like that.
If the work force of this industry is less militant than that of many others, it is also an older work force, It is still a matter of pride for many of my constituents to retire after 40 years' service with one firm. Lack of militancy, being philosophical about the ups and downs, loyalty and pride of service are little defence against the economic tide at present threatening worker and employer alike. The older the work force, the more

difficult it is to retrain redundant employees. The less militant the workers, the more likely it is that any Government will feel that the industry is expendable.
There is no doubt that at the moment a well-made pair of British shoes, fairly priced, is at a severe disadvantage at a time of high inflation when cheap and often dumped imports are being put on our market. The way in which the industry is spread around the country, with small pockets here and there, makes it very difficult for it to mount the kind of parliamentary campaign which other industries of similar size, such as shipbuilding, are often able to do, yet the needs and problems of this industry are just as real.
Although the industry is widespread, it exists in my constituency in towns such at Higham Ferrers, Rushden, Irthling-borough and Raunds, where there is no alternative employment. Severe recession in the industry can have only a disproportionate effect upon the lives of those communities. That is why I believe that the case should be put to the House.
The current position was briefly spelt out by the right hon. Member for Kettering (Sir G. de Freitas). It is sufficient to say that 10 million fewer pairs of shoes were made last year than in the previous two years. The prospects for this year are not good. Imports have increased from 17·8 per cent. of the home market in 1971 to 24·3 per cent. in 1974. Even with the cut-back in consumption this year, an extra 700,000 pairs of shoes came from abroad in the first six months of this year compared with the first six months of last year. Even where the Government have taken action over imports from the COMECON countries, imports are running at slightly above last year's annual level. So much for the promises made by the Government.
The effect has been a reduction in employment, which has been spelt out. The danger is that there will be a growing lack of confidence in our home-based industry. Not only will financiers in this country not feel it worth investing more money, but individual manufacturers will lose the hope to expand. There are many economic difficulties besetting the industry. However, we look at the threat of imports from Eastern Europe as one area where constructive action could be taken by the Government.


It is in the context of rising unemployment, increased short-time working and firms going out of operation that the proposed 5 per cent. to 10 per cent. reduction in imports from Eastern Europe should be considered. That amounts to 300,000 pairs of shoes, which is about two weeks' production of the largest firm in my constituency. My constituents know, even if the Government do not, that this reduction is totally inadequate to redeem the situation in the British footwear industry. Furthermore, the price at which leather shoes are being brought into the country—£1·66 per pair landed—can only mean increased competition at a time of ever-increasing prices for the home producer.
My constituents do not want to be featherbedded, they do not want to be nationalised and they do not want large Government loans. They want some protection against what they consider to be unfair competition. There are other reasons why they are in difficulty, as I have said, but they look to the Government to protect them against Eastern European countries such as Czechoslovakia with which we have had an unfavourable balance of trade for many years.
I should like to make a second suggestion. Some firms could improve their export potential, especially to the Soviet Union, which fails to produce anything like the number of shoes it needs. Recently the Government of Czechoslovakia were able to negotiate a contract for 32 million pairs of shoes. It has been estimated by the industry in this country that we could obtain an order for about 5 million pairs if currency were allocated for that purpose. Is it not possible for part of the global sum negotiated by the Prime Minister in the recent trade agreement to be specifically assigned to footwear? Such a step would be a shot in the arm for the British industry. If that much-publicised agreement is to be more than a few puffs from the Prime Minister's pipe, constructive action such as I have suggested should follow.
I make my plea on behalf of the industry because I believe that it has served this country well. I ask the Government not only to take the steps I have put forward but to realise that this

is an industry of small to medium-size firms. These firms are being crucified by the Government's economic and financial policies. Many of them would be only too willing to expand if they could. But they ask "What point is there? What hope is there when the Government are proceeding with a serious of economic and financial measures which are designed to drive us out of business?" If the small to medium-size manufacturers lack confidence, that will affect the level of employment and the amount of production in the footwear industry, and when that happens many more of my constituents will be out of work.
The good relations that have existed inside the industry between union and management should be recognised. It should be realised that the unanimity of union, worker and employer in the approach to the problems besetting the industry shows that there is a good future for a viable British footwear industry given a fair chance. My constituents ask for that fair chance. If the country is to overcome its economic problems by pulling itself up by its own bootlaces, let us at least see that the boots are British-made.

9.13 p.m.

Mr. Bob Cryer: This is the second debate and the third statement we have had as the result of pressure from back-bench Members of Parliament. Meanwhile, in my constituency there are short-time working and closures. In my constituency especially that has been due to the import of acrylic yarn. The negotiations that are going on with Hong Kong, Taiwan and Korea are welcomed. But they have been going on for several months and in the meantime there are short-time working and closures.
The Wool Textile Record of 25th July stated that last month 16 mills closed producing 1,760 redundancies. The magazine states:
If the Government ever needed proof that low-cost imports and a dilatory approach on their part are crippling the British textile industry, surely these figures, which do not take account of lay-offs and short-time working, provide it.
Many people say that the West Riding woollen textile industry, which produces some of the finest woollen textiles in the world, is bleeding to death. We have the right to ask tonight when the Government


intend to take measures to ensure a viable textile industry.
Fred Dyson, the General Secretary of the National Union of Dyers, Bleachers and Textile Workers, raised this question publicly and accused the Government of inactivity. The Economic Planning Council of the Yorkshire and Humberside Region in February this year, commenting on a meeting of West Riding Members of Parliament, said:
The Planning Council was bound to consider the future of the industry against their broad aim of raising the standards of living of the Yorkshire people; this meant higher average earning power and it was open to question whether it was right to encourage an industry with high average earnings when it would always, because of low-cost foreign competition, be unable to pay very high wages.
That was a discussion that took place with Members of Parliament. At the time it was thought so ludicrous as to be totally out of court. However, a statement was made in the House during February. I ask the Government to repudiate the attitude expressed by a body sponsored by themselves.
We want an assurance that the people in the textile industry in general, and in the West Riding woollen and textile industry in particular, have a future. That raises the whole question of the Government's economic strategy. We believe that selective import controls would assist. We are not talking about import controls for every item brought into this country but about the use of an economic strategy. Given our present economic crisis that is something that should not be overlooked. If the Government will not consider that matter now it seems likely that they will be forced to consider it in future.
The Government say that if they receive an application about dumping they will consider taking urgent action. As my hon. Friend the Under-Secretary of State knows, the West Riding Worsted Spinners' Federation made such an application. Apparently it has been turned down. That application took an enormous amount of research and energy to produce. The application was made in November of last year but it was processed for several months. During that period the industry was facing severe difficulties. It does not encourage the industry when it finds that it has to engage in such difficult tasks when there

is not a great chance of convincing the Government at the end of the day.
On 23rd July my right hon. Friend the Secretary of State for Industry announced a grant of £20 million for the modernisation of the clothing industry. I am sure that that grant was welcomed, but what guarantee have the Government that a modernised clothing industry will use British cloth at the end of the day? Will there be strings attached to the £20 million, or will it be another dole out in the propping up strategy upon which the Government seem to me embarking so as to keep our creaking, ailing capitalist system moving along? We want to know that economic planning is involved and that we are not merely embarking upon a propping up operation.
It was earlier announced that surveillance would be kept on imported yarns. That surveillance has been extended to clothing. That is a help, but it is ironical that the information has not been passed on to the relevant bodies. It has been a help because the process has delayed imports. The level of imports has been reduced, and that has given some degree of help to the industry. When the announcement of import surveillance was made it was stated that information would be obtained so that informed decisions could be made as to when to impose selective import control. Has that information been obtained? Is import surveillance a facade, a sop to back benchers?
The Wool Textile Delegation has made several points and I shall briefly highlight three of them. It has produced a document for this debate and I am sure that it has been circulated to hon. Members on both sides of the House. The delegation wants protection from disruptive imports of acrylic yarn and clothing from low-cost companies under the bilateral agreements to be negotiated by the EEC under the Multi-Fibre Arrangement as a matter of urgency. Secondly, it wants instructions rather than exhortation to be given to Government Departments, State trading industries, municipalities, for example, that purchases of British made textiles and clothing are to be given preference over imports.
My right hon. Friend the Secretary of State mentioned that the regional health authorities had been given consideration.


That is a good beginning. Let us expand it. Lastly, I would emphasise the fact that the recognition of a viable, balanced textile industry does not simply comprise a collection of profitable firms but must include the necessary research, and educational and training back-up facilities. If there is a continued erosion of the industry, it will not be large enough to maintain those facilities.
It is clear that the Common Market is not providing the expanding markets which were claimed for it. It is also clear that much public money has been poured into textiles. It is time that action was taken to ensure the survival of the industry—and that, in the view of many of us, means import controls. The case for those controls has been made time and again.
Retaliation is a possibility, but our economic position demands the use of every possible strategy. The difficulty was recognised in respect of other EEC members who were asked to reflate, but no such request was made of us. This will result in a reduction in our standard of living by as much as 2 per cent. in the next year. This will have its effect on textiles. In these circumstances a determined economic plan is necessary or there will be no capacity to take advantage of the upturn in trade which eventually will arrive.

9.22 p.m.

Mr. Marcus Fox: I wish to deal with that part of the textile industry with which my constituency is particularly concerned. I refer to worsted materials and to men's suitings. In my area that industry is a large employer of labour, but it is not likely to continue in that situation for long unless we take rather more action to deal with the situation than has occurred recently.
Apart from certain impressions which have been given in this debate, I must emphasise that the firms in my constituency which deal with these textiles are energetic, resourceful and independent. They do not seek protection as a be-all and end-all. They want to feel free to trade in whatever markets they find throughout the world. But they want to undertake that trade on a fair basis. They are not afraid of competition. I was involved in the textile trade before I became a Member of Parliament. I

know that the people concerned in the industry are hesitant to ask for import restrictions. They know what this would mean in respect of their export markets throughout the world. But there are other barriers which they face.
I am sorry that the Under-Secretary of State is not in his place because, whether he likes the phrase or not, I regard the present situation as dumping. I refer to the Prime Minister's words on 23rd May this year:
Wherever evidence can be produced of dumping, subsidised exports or other forms of unfair trading, Her Majesty's Government are ready and willing to take vigorous protective action on behalf of those industries.…"—[Official Report, 23rd May 1975; Vol. 892, c. 1804.]
What happened to that promise? I see no evidence of those words having been carried into action. That assurance is now a sick joke in the industry.
I am not so worried about competition from Scandinavia and Germany, but about competition from the Comecon countries. We know that more than 2 million suits will be imported this year into Great Britain. If that is not dumping, what is it? We also know that the production of wool in Poland amounts to only one-quarter of that country's own needs. What will happen if they send suits to this country at a selling price of, say, £9? That sum can hardly represent the true cost of production and it is a flagrant example of dumping and unfair trading. Undoubtedly, our home market is being plundered. In this situation many millions of yards of British cloth lie unsold in our warehouses. Consequently, because of the present situation our constituents find themselves out of work or on short-term working.
What do the Government intend to do about the situation? There are many precedents to draw upon. Italy recently introduced import deposits, and there was no outcry from its friends in the EEC. The United States has much better proposals to deal with dumping than any that we can think up. It is time that we took some action.
I am sure that by now the Government must accept that time is not on our side. The Secretary of State for Trade made this point on 23rd July, but I believe that today he has missed the point. What we need is action against cheap imports.


If the Secretary of State needs help, he can call on the assistance of Articles 12 or 14 of GATT. Other nations have used those provisions. Our European friends have various quotas available to them. Is it not time that we included in our system agreements in respect of outer garments of which wool is the dominant fibre? At the moment those are excluded.
I am sure that the debate will bring home to the Government the need for action. I ask the Secretary of State to forget his fears about retaliation. I should like to know, concerning bilateral trade, what we supply to Poland, Romania and Czechoslovakia that gives us cause to be worried?
I speak for all my constituents in the industry, including the trade unions. I am glad that hon. Members have paid tribute to the responsibility shown by the textile unions in particular, with their moderation and desire to see a profitable and viable industry in which they can continue to work. It is about time that this shoddy treatment of the textile worker by the Government was brought to an end.

9.25 p.m.

Mr. Terry Walker: I was very sorry that the Secretary of State, when opening this debate, did not say more about the footwear industry, because I am quite sure that it is of concern to many hon. Members on both sides of the House. The unions and the manufacturers in the industry are absolutely united about the need to control imports.
My constituency had a strong boot and shoe industry. Ten years ago there were a dozen factories producing shoes at a high rate. Now this has been reduced to one factory, and it has been on short time for nine months. Just recently we have lost one-fifth of the work force—roughly 200 people.
The factory in Ballymena in Ireland has been closed, as has another in Brynmawr, South Wales. There is a cold wind blowing towards us now, and we very much fear that the time will come when the footwear manufacturers will want to retract to places like Northampton and Norwich and will leave us completely on our own in the South-West. perhaps only as a depot, no longer manu-

facturing shoes, because of the problems involved.
I believe that we have a very short time in which to take action. If the present trends with footwear continue over the next three to five years, we shall see the collapse of the British footwear manufacturing industry and old jobs and skills will be lost for ever. More important than that, however, we shall be completely reliant upon our competitors from abroad to supply us with footwear.
Opposition Members have already mentioned the footwear imported from the COMECON countries. I remind the Front Bench that 50 per cent. of our shoes come from France and Italy. Imports from the EEC and Far East countries are rising, even now. The Government have taken action in respect of the COMECON countries. We can argue here whether that action was enough or whether it was ill-timed, but the fact remains that 50 per cent. of our imports come from the EEC countries.
It has been said already that the ill wind is blowing from the East, but what will the Government do about imports in general? Footwear is being dumped on the British market now. There is no doubt about that. I hope that when the Minister replies he will say whether we can, through the Commission, take action to control imports from EEC countries. Perhaps he will be able to deal with this point. If no action is taken, we shall be in the position of retracting totally within the next few years.
In the present economic crisis, I believe that a Labour Government should be encouraging British manufacturing industries. This was mentioned in the White Paper "The Attack on Inflation". It talked about import costs and said that we must do all we can to keep down costs and prices which are within our control. It also said that a big increase in import prices would impose on us a further reduction in our standards of living and that it would then take longer for our policies to achieve our anti-inflation targets.
We must reduce our reliance on imports by building up our own industries. We have been told already that if we take action with regard to import controls, it will bring retaliation. I ask the Minister from whom he expects the retaliation to come. We have heard my hon. Friend


the Member for Burnley (Mr. Jones) say that during the referendum campaign he went round telling people that it was in the country's best interests to stay in the Common Market. It struck me that he was perhaps having doubts. However, that is another matter. From whom are these retaliatory actions expected?
If we cannot have import controls, is it possible to agree quotas with other countries? If we do not do something, we shall find that British footwear workers will be on the dole and the day may come when we shall all be walking about in our stockinged feet.

9.32 p.m.

Mr. Robert J. Bradford: As a Member of Parliament from Northern Ireland, perhaps I may add the voice of the Northern Irish people to the cry to the Government for action at this time of crisis in the textile and footwear industries.
I think that four actions are needed. Import controls are essential, as are price controls and the implementation of the dumping laws and of agreed quotas.
The Government seem to imply that the problem is a relatively grave one at present. When we look at the statistics, however, we discover that in the textile industry we now face a crisis. Perhaps I might use one statistic to prove my point. Our level of imports of shirts at the moment stands at about 53 per cent. The Japanese industry considers that it has a very grave problem when its percentage of imports stands at 7 per cent. That is the extent of the crisis, and until the Government face the reality of these statistics I fear that we shall get nowhere.
As for agreed quotas, there are undoubtedly protected markets in both France and Italy within the EEC. Neither country accepts its quotas of imported goods from the underdeveloped countries, and we suffer from the rebound of that unfair practice.
We have been told by the Government that certain imports from Portugal are now subject to import duty, and I understand that this might stand at about 10 per cent. However, the import duty is not applied to the shirt industry. Northern Ireland is responsible for approximately one-third of the total shirt industry in

the United Kingdom, and its future is very dim unless import duties are imposed upon products like shirts from countries such as Portugal. By the time dumping legislation is implemented, the problem will be beyond redemption.
Not only are we importing an undue proportion from Eastern bloc countries and the Far East. We are also importing ever-increasing amounts from the EEC. In 1973, imports of made-up goods from Ireland totalled £30 million, from France £11 million and from Italy £10 million. If the United Kingdom shirt industry and the general clothing industries go out of business because of unfair competition, we shall have to rely on imports and this will have a drastic effect on our balance of payments. The future of the textile industry is critical.
In Northern Ireland we have no alternative to offer the thousands of people who will lose their jobs in the man-made fibre, linen and shirt manufacturing industries if lack of action by the Government results in massive unemployment.

9.37 p.m.

Mr. Alan Fitch: I am not generally in favour of across-the-board import controls for industry, but I am in favour of selective controls for industries like the two we are discussing tonight. Blanket controls lay the foundations of a siege economy, and I do not think this is the answer to our present economic difficulties. There is a case for selective import controls for the textile and footwear industries because they have proved unfair competition and dumping. Those are sufficient criteria.
In discussing anti-inflation proposals with the Government, the TUC mentioned that it agreed with selective controls for the textile industry. Selective controls that are imposed because of unfair competition or dumping would not be inconsistent with our membership of the EEC.
In my constituency I have footwear interests, but they have already been dealt with in some detail and at some length. I shall therefore not comment on them except to say that the steering committee which the Government recently set up is a very good innovation and is making progress in its investigations. It will be some time—perhaps not until the 1980s—before it can make a real impact on


the industry. We must have preventive action, and the imposition of import quotas is necessary to ensure that the industry is not annihilated by imports. The footwear industry could be made viable and profitable once we got rid of the unfair handicaps from foreign competition. To become competitive in the world markets, the industry must be in a position to attract investment.
I agree with the hon. Member for Wellingborough (Mr. Fry), who spoke about the possibility of opening up trade in footwear with the Soviet Union. The money discussed by the Prime Minister when he met Soviet leaders recently could be earmarked partly for this industry.
The recession in the textile industry has now reached its first anniversary. The current run of redundancies and factory closures began last August and there is at present no sign of any abatement. During this period in the North-West there have been at least 18 factory closures involving the loss of over 3,000 jobs.
In their efforts to end their plight all sections of the industry have combined—the unions, the employers, the Textile Industry Support Campaign and the British Textile Confederation—and they have all consistently argued that the only solution lies in effective measures to reduce the high level of textile imports which are draining away the industry's lifeblood.
There are serious doubts in Lancashire—and I do not like having to say this—not whether the Government are able to help the industry but whether there exists now the will to do so. I hope that my hon. Friend the Under-Secretary will say something to dispel that feeling. The textile industry is now highly capital intensive with modern machinery. It is efficient and it is an industry in which work is performed around the clock on all kinds of shift systems and where workers employed by the most efficient firms have had to suffer many weeks of temporary employment this year. In spite of its efficiency the industry is still suffering from unemployment.
I suppose that we should gain a crumb of comfort from the fact that the Secretary of State announced that in future all Government Departments would be expected to buy British textiles, and that is

a good move psychologically. In practical terms, however, it amounts to only about 2 per cent. of total textile consumption.
A lot of industrial capacity has been lost and many jobs have disappeared. The Government should take steps to halt any further closures. If they cannot see their way to affording assistance to the industry as such, they should consider the industry in the light of our national interests. Our national economic well-being rests upon the efforts of our industry. Unless the present rot in the industry is arrested we shall lose capacity which will not be replaced and which the country cannot afford to lose.
The hon. Member for Rochdale (Mr. Smith) mentioned the closure of a mill in his constituency. The Empress Mill, just 300 yards outside my constituency in the constituency of my hon. Friend the Member for Ince (Mr. McGuire), is also closing. The outlook for my constituents is very bleak. I therefore make a serious appeal to the Secretary of State to take urgent action.
We should like to see the Secretary of State for Industry in Lancashire. He might come on an unofficial fact-finding tour when he could talk to people at grass roots level. I am not suggesting that he does not understand the industry. I am sure that he does. But if he could get from the people of Lancashire, the textile and footwear workers, their gut reaction to the present situation it would be of great help to him.
I am pleased that the Government have allowed us time tonight to debate this important subject. However, merely debating a subject is not enough. We want action and we want it quickly.

9.45 p.m.

Dr. Keith Hampson: We have heard so many figures and arguments not only in this debate but in all the others we have had that there is only one point that I wish to make. As an hon. Member who has a high proportion of the management of the wool textile industry in his constituency, I wish to urge the Ministry to get on with the job. We need urgent action. It is extraordinary, every time a statement is made, whether it be by the Prime Minister, the Secretary of State, or merely a statement in debate, how little seems to happen.


Most of the small firms within the industry have been hanging on, waiting for action. This is not a self-inflicted hardship. They are suffering from a staggering increase of imports, particularly in manufactured items such as clothing, especially from the State trading countries. That is undermining the market for hard cloth and it is feeding back down the process to the spinners, hence the redundancies.
Anyone connected with the trade knows that the pace of redundancy, layoffs and closures of small mills is picking up because there have been so many statements and debates, but each time nothing concrete has been done. I do not wish to mislead the House or the Minister when I say that we are talking about a matter of weeks.
Order books are in such a state in some of the major firms I know that unless action is taken it will not be long before half the industry ceases to be viable and very sizeable operations will go out of existence. We are not talking about satanic mills. They may look it from the outside, but they are full of the costly latest equipment.
A major spinning firm has written to me indicating that it has just started a large expansion programme of buildings and equipment, but it is now frightened for the future. It has ancillary costs of gas and electricity that are hitting it hard. Its order books are tightly stretched. Its fixed-price contracts have been eroded by inflation. The situation is extremely bad.
The Secretary of State did not give us any answers at all. He said that the Under-Secretary would deal with all the matters. I hope that we shall get answers because words and sentiments are not enough. They will not keep the industry viable until the cycle in the textile depression reverses. If it continues the industry will simply not be in existence. Certainly money will not make the world go round in this case. The Government churn it out through all sectors of the economy, but that is not the answer. There must be a different attitude and political will.
Money will help only the small firms which are being forced by legislation to put guards on their carding machines at a cost of £2,000 to £3,000 each. There-

fore, the cost to a small firm will be between £30,000 and £40,000. They have no future. There is no demand for their products. There are no profits to pay the sums of money specified under Section 8 of the Industry Bill. They are not eligible to receive any benefit because the cost is not in excess of £50,000.
That is the only section where money will help at present. We need political will and that is what I hope the Minister will give us.

9.49 p.m.

Mr. John Garrett: I wish briefly to refer to the condition and the prospects of the British footwear industry. In my constituency, footwear workers are asking whether the Government consider their industry expendable in the interests of free trade and the unplanned market economy. In Norwich at present, 80 per cent. of the footwear workers are on short time. One announcement of redundancies follows another like nails being driven into a coffin. In the past few months, for example, the Kiltie Division of the Norvic Shoe Company declared 20 redundancies, the Bally Company declared 60 operatives and 28 office workers redundant, Edwards and Holmes announced 30 redundancies and Sexton's another 60 redundancies.
We are seeing one of the main industries in my constituency wasting away before our eyes. In January 1972 NUFLAT, the boot and shoe operatives' trade union, had a membership in Norwich of 6,480. In May 1975 the membership was down to 5,190, a fall of nearly one-quarter in three years.
Norwich is in the heart of the lowest wage area in the country with all too few alternative job opportunities in manufacturing industry. Many families depend solely on the footwear trade. The level of their concern can be seen from the fact that I was recently handed a petition asking for protection for the industry signed by 3,151 footwear workers, which must be 50 per cent. or 60 per cent. of the total footwear employees in the city. Norwich people are tolerant and slow to anger, but feeling is running very high in my constituency on this question, and so it should.
If one company employing 6,000 or 7,000 people in one of the great industrial areas of this country was going downhill


as fast as the Norwich footwear industry. I would bet that the Government would step in and save it with a great flourish. Because the footwear industry is organised in a large number of small units, however, the Government appear to be willing to let events take their course while emitting pious good wishes.
In the last week—this is an apposite comparison—the Secretary of State for Industry has published a consultants' report on the British motor-cycle industry. That report traces the decline of that industry, to a point where it is now probably irreversible, to a policy—if it can be dignified by the term "policy"—of what might be called defensive withdrawal. As foreign competition intensified, our motor-cycle producers withdrew first from one sector of the market and then from another. This progressive retreat meant that the British motorcycle industry was less able to take advantage of each upturn in the market. The industry grew smaller, weaker, less able to compete, stage by stage, until there was almost nothing left of it, and the cost of rescue by the Government now appears to be prohibitive.
I foresee the same process operating in the footwear industry. As it contracts step by step, it will be unable to expand again when the upturn comes because workers and resources will be permanently dispersed.
The British footwear industry is under attack from all sides—first from low-cost producers in the Far East, secondly from unfairly priced products from Comecon countries, thirdly from France and Italy, and now from Argentina and Brazil. Each one of those exporting countries is spreading its penetration into the various sectors of the United Kingdom market. Comecon countries, at first virtually confined to men's leather footwear, are now penetrating deeply into the United Kingdom market for women's and children's leather footwear. That, as in the motor-cycle industry, can lead to a process of continuous defensive withdrawal and ultimately to the collapse of the whole industry. That is the process we are now seeing.
The Norwich footwear industry suffers particularly from competition from France and Italy. One-third of the im-

ports of leather footwear into this country come from Italy, a country with a cost stucture not unlike our own. It is nothing short of amazing to me that Italian footwear exports are 10 times those of the United Kingdom, and French exports are four times higher than ours.
The footwear industry has a lot to answer for in letting this situation develop. There is little point in trying to apportion blame now, but it is pretty clear that the management of the British footwear industry is being beaten by Italian design, flair, innovation, quality and marketing.
Be that as it may, the Government still have a duty to assist the industry to regenerate and develop, not just to sit back and watch. Throughout British industry, managements have collapsed in the face of foreign competition leading to what has been described as the de-industrialisation of Britain, which is a fancy term for a weakening economy, men and women on the dole, loss of pride, loss of prosperity and loss of hope for the future. If our industries collapse, where shall we be? We shall be the paupers of Europe—a nation of producers become a nation of mendicants.
The footwear industry can be revived, developed, encouraged, persuaded and, if need be, forced to grow to prosperity only by Government intervention. There must be a development plan for the industry sector by sector and region by region. First, the industry has the right to protection by import controls, import deposits or pre-entry licensing. It is worth noting that Italy successfully cured its balance of payments deficit last year by imposing import deposits on manufactured goods with the concurrence of her Common Market partners. If Italy can do it, we can.
Behind the temporary protection against imports, the Government, manufacturers and unions should set about designing a plan for the growth of the industry, analysing its present strengths and weaknesses, setting investment, employment, production and export objectives, analysing the gaps between the present situation and those objectives, and then developing programmes of action for closing those gaps in a systematic and planned way.


The Footwear Study Group, on which I have the honour to serve and which is sponsored by the Department of Industry, can do valuable work in collecting the data on which a plan can be based. Once the industry has had its objectives set, the Government should use the Industry Act in a more constructive way than it has been used before to assist the industry in certain key areas of its development. For example, they could use that Act to improve management training, to assist a higher level of investment and the use of modern management techniques, to set up a co-operative export organisation—that is, buying footwear in this country and then exporting it through a network of overseas agencies—to set up a co-operative, design and quality improvement organisation, and to encourage market research and opportunity spotting at home and overseas.
There is a clear alternative in the case of the footwear industry. We can either face the progressive collapse and loss of the whole industry, which still employs 80,000 people, or we can go for a plan for growth. I hope that the Government will not let pass the opportunity to plan the regeneration of the industry.
In many ways the footwear industry is all British industry in microcosm. It points to the question, shall we be a manufacturing nation or shall we sink because we could not bring ourselves to think and plan our way out of decline?

9.57 p.m.

Mr. Michael Morris: Northampton is also one of the centres of the footwear industry. The industry recognises that it is not the easiest of industries with which to deal. We recognise that shoes and footwear are among the necessities of life, that it is the prerogative of the developing countries that they should produce their own footwear at an early stage in their development and that all Governments have to balance the needs of the consumer in terms of the prices of shoes in the shops against the needs of the manufacturers.
However, there is still one major problem area and I make no apology for returning to it again this evening. It is the

problem of a particular aspect of the import situation. I, and the industry as a whole do not share the view of those hon. Members who wish to see an across-the-board import control. Certainly the manufacturers in Northampton do not want that. We are concerned that around 28 per cent. of the market is taken by imports. The industry has a deficit of approximately £60 million, which is a worrying figure.
Another worrying factor is those countries which manage to sell their shoes in this country at a price which is below—in some cases 100 per cent. below—the raw material cost of our shoes. As has already been mentioned by my hon. Friend the Member for Wellingborough (Mr. Fry), men's uppers are landed in this country from the Comecon countries at £1·66 and in Northampton the same article, using the same raw materials, works out at about £3. That is not, by any yardstick, fair competition.
The results are easy to see. In a space of four years imports have doubled from Comecon countries. Twenty-eight of our manufacturers went to Czechoslovakia to check whether manufacturers in that country were employing some marvellous new technique that enabled them to produce at such a low price. The report of our manufacturers was that productivity in Czechoslovakia is lower per man and per factory than it is in this country. There is no magic formula there.
We all know that these goods are in effect being dumped. The worrying feature of the debate—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

BUSINESS OF THE HOUSE

Ordered,
That, at this day's Sitting, the second Motion in the name of the Prime Minister for the Adjournment of the House may be proceeded with, though opposed, until midnight and that the Motion relating to Parliamentary Expenses [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Pendry.]

TEXTILE, CLOTHING AND FOOTWEAR INDUSTRIES

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pendry.]

Mr. Morris: The worrying feature of the debate is that although consistently hon. Members have given firm evidence from the textile and shoe industries to both the present Government and the Conservative Government of specific cases of what in marketing terms are seen to be dumping, nothing has been done. Products have been landed here at a price with which no British manufacturer can possibly compete. He cannot even buy his raw materials at such a price. Yet consistently the Department of Trade says that it needs 12 months in which to investigate. That happened in 1972–73 in the case of the shoe industry. Then the Department admitted that there had been dumping, but by that time the Czechs had changed the designs, so we had to begin all over again.
If our laws to protect the textile and shoe industries are inadequate from dumping by Comecon countries, by Korea and Taiwan and others, let them be changed. I am sure that hon. Members would be quite willing to return from holiday in order to get the legislation through.
The shoe industry as a whole is independent-minded and proud. It has served the country well. Its relations with its workers and the standards of its products are among the best in the world. All that it and the textile industry ask for is fair and honest competition. They are not asking for major subsidies. It is up to the Government to take action to ensure that such a situation comes about. Let them either put the boot into the dumpers now or the boot goes into our own workers tomorrow.

10.3 p.m.

Mr. Mike Noble: Of all hon. Members, I am probably the only one with a constituency which has a substantial number of both textile and footwear workers. Both are suffering the problems that we have heard about tonight. In my maiden speech I said that there was immediate need for import

restriction. Regrettably, nine months later, I have to repeat that request.
I recall various ministerial statements. My hon. Friend the Member for Oldham, West (Mr. Meacher), then Under-Secretary of State for Industry, told us last January when speaking of the footwear industry,
It is essential to place it on a sound long-term footing. The Government believe the footwear industry to have potential for development both in the United Kingdom market and abroad….The Government certainly do not consider this industry to be expendable."—[Official Report, 20th January 1975; Vol. 884, c. 1205.]
On 20th March, speaking of textiles, my hon. Friend said:
I was asked…whether the Government intended that the textile industry should remain viable and prosperous.…it would be unthinkable that any other consequence should materialise."—[Official Report, 20th March 1975; Vol. 888, c. 2028.]
I recall the statement by my right hon. Friend the Prime Minister on 23rd May on the textile and footwear industries. He told us:
We are determined to ensure that the worldwide recession in these industries, as in others, does not cause damage which would mean the loss of viable capacity which will be needed when the expected upturn comes in world markets."—[Official Report, 23rd May 1975; Vol. 892, c. 1805.]
It is against statements like these that the Government's actions must be judged, and we have a right to ask what has happened.
Hon. Members have referred to voluntary restraints on imports of footwear from Comecon countries. They are welcome but insufficient. Hon. Members have also referred to the Government inquiry into the footwear industry. Again that is very welcome, but inevitably an inquiry will take time and it will produce results only if there remains an industry for it to work upon.
It is generally recognised on both sides of the Chamber that there is a need for restructuring of the industry. The retail side in particular needs examination in a situation where the British Shoe Corporation is responsible for about 50 per cent. of the total retail outlets so that there is a question of monopoly powers. Of course, as my hon. Friend the Member for Norwich, South (Mr. Garrett) has indicated, the industry must pay attention


to problems of design, management, marketing, exporting and other aspects. But none of these things will help in the present situation.
In the last 12 months, from July 1974 to March 1975 employment in footwear has fallen from 83,500 employees to 77,900; and of course the decline continues and is matched by a reduction of 26 per cent. in orders in the first part of this year compared with 12 months ago. In my constituency, where there is such a heavy concentration, particularly in one part, Rossendale, where over 40 per cent. of the people are employed in one industry, the effect is devastating.
We know the causes. They have been spoken of today. There is the fall in the general level of demand, but associated with it there is a continued rise in imports despite the recession and despite the voluntary restrictions by Comecon.
The situation in the textile mills is exactly the same, particularly in the cotton textile areas. There have been references to the closures at the Empress and Era Mills and closures are continuing. Part-time working, which is particularly severe in the industry, is also continuing.
In footwear, as in textiles, Government action has been too little, too late and too slow to take effect. We have had the situation with Greek and Turkish yarns, the Multi-Fibre Arrangement and promises on dumping and on surveillance and licensing, but these have not prevented and will not prevent further closures.
It is significant that on both sides the case has been argued for import restrictions. Tonight I am encouraged by one thing—the weakness of the Minister's case when he spoke of import controls. I felt that his case was transparent. We do not want to stop all imports. We want to see a level of imports of footwear and textiles which the industries can absorb in the present situation of recession. No one has made the point that the current deflationary policies of the Government are reducing overall demand without protecting jobs and without reducing the penetration of imports.
Great play has been made of the danger of retaliation. Quite frankly, I find this a much exaggerated claim.

Should we not bear in mind that the countries most likely to retaliate against selective import controls are precisely those with positive trade balances with this country which would therefore not be in a position to retaliate because to do so would affect them far more than us? Secondly, should we not also remember that only very recently the EEC recognised the special problems of the United Kingdom when it was giving us advice on reflation?
It has been said that selective import controls would create shortages. I believe that that is absolute rubbish in circumstances where up to 50 per cent. of the labour force is on short time, when unemployment is increasing and when mills are continuing to close. Where selective financial assistance has been given, the taxpayers' money will simply pour down the drain if mills are forced to close against the incoming tide of imports. We should also remember that the concentration of employment, particularly in Lancashire, in textiles and footwear will create a social problem of un-employment the like of which has not been seen since the 1930s.
We therefore repeat our demand for import controls in the knowledge that we are backed by both sides of both industries, textiles and footwear. We repeat it in the knowledge that we are backed by the economic committee of the TUC, and we repeat it in the light of the recent statement of my right hon. Friend the Prime Minister to Time magazine that
we are not going to sit back and watch a remorseless increase in British unemployment. If the slump doesn't begin to improve quickly, we obviously reserve our rights to protect our balance of payments by various means.
We on this side of the House, some Opposition Members, the whole industry, the TUC and many economic observers at home and abroad are expecting action on import controls. We say to the Government "If you want to save this industry—to use a Lancashire expression—if you are going to put your money where your mouth is, do it now."

10.11 p.m.

Mr. Adam Butler: I am glad to have been able to catch your eye, Mr. Speaker, because my constituents would not have forgiven me if I had not spoken in this debate. I suppose that one


in three of them is employed in textiles or the footwear industry. I think that I am also right in saying that I am the first Member in the debate to speak on behalf of the hosiery and knitwear industry, which is frequently forgotten in the House. Textiles do not start and end on either side of the Pennines. Those employed in the hosiery and knitwear industries total, still about 115,000 people.
The East Midlands is very much part of the textile industry. Perhaps it is our fault if that has been overlooked in the past, because we have tended to stand on our own feet and look after ourselves. I might say to the spinners of the North "You depend on us as much as you depend on the weaving side of the business." Up to now we have been thought to be prosperous. There has been thought to be a high level of employment in the East Midlands hosiery and knitwear industry. But that industry has had the fastest rate of increase in unemployment of any industry in the United Kingdom.
A figure which exemplifies that better than anything else is the fact that in the Leicester area, whereas a year ago unemployment was substantially below the national average, at 2 per cent., the latest figures show that it has escalated to 5·2 per cent., equivalent to places such as Scotland and the North of England, which we associate with a traditionally high level of unemployment. Nearly 9,000 people have lost their jobs in the first five months of this year. In my biggest town of Hinckley, and the surrounding conurbation, the unemployment position is the worst since the war.
Those are the facts. The rate of closures and the legions of redundant hosiery men tell their own bleak story. The Government have taken action, but if ever there were a case of too little and too late it is in respect of the hosiery industry. Every move has had to be squeezed out of the Government. Delays have occurred in the implementation of every sort of measure. Because the action was taken too late, it is much more difficult now to recover.
I think that the House knows, because I have spoken on the subject a number of times, that I advocate selective import controls on textiles. I have done so over the years, and I am not ashamed to do so again now. I welcome the Multi-fibre

Arrangement, but it is too late. If the provisions could have applied to the 1973 levels, that would have given the industry some respite, but the level of imports in 1974 was substantial—20 per cent. or 30 per cent. above that of 1973. If we take that as the base line, which I believe is the case under these arrangements, our industry will not benefit as it should.
I turn to the burden-sharing arrangement. Can the Minister say what the rate of increase in the different items specified in the various orders and under the various agreements will be for the United Kingdom? We know what the rate of increase into the Community will be.
I intervened in the Secretary of State's speech on the subject of South Korea. I understand that the right hon. Gentleman has to be a little evasive in his reply. But can the Under-Secretary let us know how long he is prepared to let negotiations with the South Koreans continue before he implements unilateral action under Article 3?

Mr. Deakins: Our deadline, and that of the Community, is the end of this week.

Mr. Butler: That is a welcome answer, which I appreciate.
The orderly marketing of imports—that is to say, the gradual increase over a previous base line—raises wider issues. There are many labour-intensive industries in this country. Will the Government look at their situation so that they do not face in three or four years' time the situation which is now faced by the textile industry?
The story of the foowear industry is much the same as that of the textile, except that the textile industry competes with unfair competition from low-cost labour countries. The footwear industry competes with goods from the Far East and subsidised exports from the Comecon countries. Those exports are subsidised as the Comecon countries need foreign exchange. The action taken to reduce the number of pairs of shoes imported by 300,000 is a fleabite. My hon. Friend the Member for Wellingborough (Mr. Fry) referred to a group of factories located in our two constituencies. He said that the cut was equal to a fortnight's production of that group. I am told that the 300,000 pairs of shoes are equal to


half an hour's production of the whole industry. The Minister must reconsider the matter and make significant cuts which will have an impact on the trade.
Reference was made to the British Shoe Corporation, which is responsible for the distribution of almost half the shoes sold. It imports half, or more, of the shoes which it distributes. We challenge its claim to the title of "British" Shoe Corporation.
The hosiery and knitwear industry and the footwear industry have characteristics in common. The vitality of both industries is accounted for by their excellent employee-employer relations. I confirm that from my constituency experience. On Friday I attended a combined meeting of

trade unions and employers, who presented me with the latest facts. That is one characteristic shared by these industries. Then, they are successful, efficient and modern enterprises which can take on the world's best firms.
My constituents do not complain about imports from the EEC. They say that that is fair competition and that they will take on the Italians and the French. But they say that they cannot take on the Comecon countries or some of the South American countries. That is unfair competition. These industries need more help from the Government. That help has been too little and too slow in coming. Now that the textile and footwear industries are faced with a crisis recession, will the Government act to put British jobs first?

10.20 p.m.

Mr. Max Madden: This debate coincides with a further deterioration in the crisis in which the textile industry has been locked for some months. The dimensions of the crisis have been described in detail so I shall not dwell on the facts.
We know that the industry is facing shrinking markets worldwide. We know that it is facing unfair competition from foreign imported textiles from both the developed and the under-developed world. We know also that there is a united call, and general consent from all sections of the industry, for the imposition of selective import controls. That call has been argued in all recent discussions in the House, and on all occasions successive Ministers have resisted it.
Ministers put forward two main reasons for resisting import controls. The first is that they believe that such controls are unnecessary because there is to be an early upturn in world trade. Secondly, they argue that they are undesirable because they would immediately result in retaliation from overseas markets to which we sell.
I voice the suspicion which exists within the textile industry and others about the early prospect of an upturn in world trade. There is a feeling of pessimism. The optimism expressed by the Government is not shared by many industries. In the knowledge that many people think that the upturn in world trade will be delayed, I shall dwell on the aspect of retaliation.
I hope that the Minister in winding up the debate will explain, for the first time, why the Government believe that if we imposed import controls they would have effects which other countries which have imposed import controls have not experienced. Australia, America and many other countries, including Italy, have imposed import controls and they have had beneficial effects and not retaliatory effects.
The industry and representatives of the industry are asked by the Government to put forward facts, figures and information to back up claims of unfair competition and dumping. All the facts, figures and information are known, and I ask the

Government how much more they need to know before they act. I ask the Minister, in turn, to give evidence and information in support of the Government's contention that there would be retaliation if we imposed import controls.
I and many of my colleagues believe that this argument which is often expressed by the Government has been over-exaggerated and played up for a variety of reasons. Many in the textile industry are beginning to suspect that the Government are refusing to act on import controls for textiles because, if they were to concede, they would have to concede the economic argument for import controls for other industries. If they were to do that, they would be conceding the whole case of their economic policy in the face of those who have been arguing an alternative economic strategy. The media are mesmerised by "Bennery". They would be better employed in examining "Leverage". We have heard from the official Opposition spokesman about the murky rôle played by the Chancellor of the Duchy of Lancaster in import controls—

Mr. Winterton: Invisible.

Mr. Madden: Shadowy, certainly. We must again ask the Government exactly what has been the rôle of the interdepartmental committee which the Chancellor of the Duchy headed. We believe that the Department of Industry put forward a forthright and closely argued case for import controls and that the Chancellor of the Duchy, backed by the Department of Trade, smartly kicked out the proposals. Then came the Prime Minister's statement followed by the statements of the Secretary of State for Industry.
Let us have some honesty. Let us have some frankness from the Government about how they see the position of the textile industry in the years ahead. We should not adopt the piecemeal, ill-considered and unsatisfactory packages of the sort only recently announced. We need a planned approach to the textile industry. We need the sort of approach which has been expressed so clearly by my hon. Friends tfie Members for Norwich, South (Mr. Garrett) and Rossendale (Mr. Noble). We should use the provisions of the Industry Bill. We must begin


to plan properly for the industry. We need import controls as a matter of urgency. We need directives for all Government Departments to purchase British-made textiles. The present directives are unsatisfactory and can and will be breached. We need a series of regional and national conferences embracing all sections of the textile industry and involving Ministers and Departments. We need to set up a national purchasing agency. Such an agency would be of considerable assistance to the industry.
Clearly, the industry needs Government help and Government action. In particular, it needs import controls. If the Government reject the call which is being made by those in the textile industry they will live to regret their rejection. They will reject that call at their peril.

Mr. Deputy Speaker (Mr. Oscar Murton): Hon. Members are doing reasonably well by making short speeches, but Mr. Speaker wishes me to point out that approximately 10 more Members are still desirous of taking part in the debate. The winding-up speeches will begin approximately 55 minutes from now. It is in the hands of hon. Members to be as brief as possible.

10.27 p.m.

Mr. Nicholas Winterton: This is a very important debate. I shall speak on behalf of the textile industry, textile employers and textile workers. Macclesfield is known for its silk, for its clothing and for its textile machinery manufacturers. The Ernest Scragg undertaking is world renowned for its textile machinery. Something in excess of 80 per cent. of its production goes in exports which are so vital to the country.
I speak on behalf of my constituents when I say how disappointed I am with the Secretary of State's speech and with the statement made on 23rd July. They are totally irrelevant to the present needs of the industry and they demonstrate a total lack of understanding of the industry's real problems. There is a feeling within the industry that the Government have decided to write it off. I hope that in winding up the debate the Under-Secretary of State will prove that feeling to be wrong.

The cotton and allied sector in the North-West has been decimated as a result of inertia and failure by successive Governments to control imports into this country from developing nations. As we have heard already, the wool sector is showing signs of going the same way as the cotton and allied sector. The point has not been made so far, but the manufacturers of man-made fibres, the so-called glamour sector of the textile industry, are now finding themselves in difficulty. It is no longer true that they have the advantage over the developing countries because of their advanced techniques. Their techniques are in the possession of the developing countries, and those countries are using them to sell their products in this country. The total amount of man-made fibres moving into the United Kingdom in the first quarter of this year was 13 per cent. less than that which moved in during the comparable quarter of last year. If that is happening in man-made fibres, a growth sector of the industry, and if the growth sectors cannot compete with imports from low-cost producers, how can the traditional sectors, such as wool and cotton expect to survive?
The Secretary of State made the point that it was the down-turn in the textile cycle, the fall in demand, that was creating problems in this country. Let me point out one or two facts and statistics. Is the right hon. Gentleman aware that imports of shirts in June 1974 were 3·6 million but that in June this year they were 5·8 million? This is an enormous increase on an already very high figure. Does he know that the issue of quotas relating to Hong Kong for the first five months of 1975 was up by 130 per cent. on the first five months of last year, and that the total imports of shirts in the first half of 1975 was up by 11 per cent. against the very high level in the first half of 1974? These questions should be answered by the Minister in his winding-up speech.
I am delighted that an announcement is to be made about our negotiations with Korea, because a spinning mill is very shortly to open in that country which will have an output capacity of one-sixth of our total capacity in this country. It is vital that Korea does not unload cheap textiles into this country to the


detriment of the United Kingdom industry.
No wonder the inaction of successive Governments, particularly the present Government, has resulted in a figure of a million unemployed. Unfortunately, the Government seem to pay more attention to the needs of the developing nations than to those of the British people. By all means help the developing nations—the textile industry has set a very fine example in this direction—but surely not at the expense of the total extinction of a complete industry and of increasing unemployment during the most serious economic crisis we have had since the 1930s.
I draw the Minister's attention to the possible consequences of his policies. The first and obvious one is that we shall become completely dependent on the developing nations for our sources of supply. This is at present no problem, as there is a surplus of capacity on a world basis to supply all these needs. We have only to go back two years to 1973, however, when there was a world boom in textiles and supplies were difficult to obtain. At this time many developing nations were failing to honour contracts and to supply the United Kingdom's requirements. Large sections of the home industry had been eliminated by imports during previous slumps. The home industry was unable to meet demands from consumers in this country.
As soon as this serious recession is over, I suggest, the shortages will be even greater than before, and many United Kingdom consumers may be unable to purchase textile requirements of their own choosing. Even now the troubles in Portugal are an example of what can happen, Portugal being one of our larger suppliers of textiles. Because of the troubles, some supplies are not coming through and, through no fault of their own, manufacturers in this country are unable to meet their obligations.
How do the Government view the strategic implications of allowing two-thirds of our total textile requirements to come from abroad? We may soon, like Sweden, be in a situation where we cannot even clothe our Armed Forces, let alone the population as a whole. I am told that the Swedish textile industry can supply only 15 per cent. of the needs of

its armed forces, and that the Swedish Government have only just woken up to the strategic implications of allowing the textile industry to sink to this ridiculous level. They have now decided to pump money back into the industry to build it up again. I suggest that the Government will soon be in a very similar position unless action is taken.
The Government's policy, as set out in the Minister's statement of 23rd July, is totally irrelevant to the needs of the industry and will do nothing to reverse the trends which are taking place. To suggest that money is the answer, without a firm statement of Government intent to restrain imports—I use that word rather than suggesting cutting off totally—at a given level, is utterly reprehensible and an irresponsible use of taxpayers' money, particularly at a time of economic crisis.
Mills are closing. We heard that the Empress Mill in Ince and another in Rochdale are closing. A number of mills in Macclesfield are closing also. Time is short, and, unless the Government retract from their entrenched position with regard to imports, thousands of textile workers will be added to the mounting lists of unemployed, with dire consequences not only for the industry itself and those who work in it but for the survival of the present Government. Action is needed now, but the proposals of the Minister of 23rd July were long-term proposals. We need action in the short term.
I urge the Minister to take action. I urge him to ensure that all Government Departments buy British. It would be interesting to ascertain how many hon. Members present tonight are wearing British-made textiles. My shirt, my tie and my handkerchief are British made, in fact made in my constituency. My jacket and trousers were made in Northern Ireland. I am practising what I preach.
I hope that during the coming recess every hon. Member will continue to bring pressure on the Government and set an example by himself, or herself, buying British.

10.35 p.m.

Mr. George Rodgers: I am sure that we are all grateful that time has been made available to discuss the plight of what is now a stricken industry.


I hope that the time has not been allocated simply to mollify us and to allow us to let off steam before the end of the parliamentary Session.
Tonight, the Department has been presented with proposals designed to meet a desperately serious situation, and upon them the success if not the very survival of this once mighty industry will depend.
I find it very difficult to comprehend why there is this lack of urgency about the plight of the textile industry. Possibly it is because, generally speaking, it is isolated geographically. In Lancashire, certainly, we find that the industry is concentrated in one region, unlike other great industries such as construction, engineering and motor manufacture which are scattered about the country, and people not directly associated with textiles are not aware of the gravity of the situation.
There are historic reasons for this. Originally, of course, it was a cottage industry, with the man doing the weaving and his wife the spinning. Indeed, I believe that the word "spinster" originated from the practice of employing unmarried women to help out with the spinning. Then the industry moved out by the rising streams from the Pennines, which were used as its source of power. Then, by extraordinarily good luck, it found itself sitting on top of the rich coal seams of Lancashire.
We have had the experiences of coal and cotton, both major industries in Lancashire for such a long period, now in a state of decline. We have seen the folly of successive Governments in deliberately closing down coal mines and then looking overseas for our sources of energy, and we know the consequences. There may be some solution in terms of energy. We have North Sea oil, or we shall have in the comparatively near future. But there is no textile industry to be found off the north-east coast. If the industry does not survive the coming months, it will never recover.
We find that communities in Lancashire are established round the mills. The prosperity of the people is interwoven with that of the local mill. If a mill is forced to close, very often a whole community dies. Within the life span of one person today, the industry has gone

into a decline and fall which is quite dramatic and unbelievable. Towards the tail-end of the last century, we had some 82 per cent. of the world trade in textiles. In 1913, Lancashire still exported four-fifths of its textile production. Now we see the folly of a situation whereby we are inflicting wounds upon our own community. The wounds are self-inflicted.
Since 1959, we have seen a grand slimming down of the industry. It was described as a formula for survival, and perhaps in 1959 that was justified. If a 20-stone man can be slimmed down to 10 stone, he is invigorated and the loss of weight is beneficial. But it is impossible then to take another 10 stone off him. That is the situation in the textile industry. It is paradoxical when we remember that it is the very industry which obeyed the text books of the great Right-wing economists, in that it is strike-free, it is a low-income industry and it has accepted all sorts of strange shift working and multi-shift working. People who have worked in the industry have tolerated a great deal. Yet these industries, as a consequence of that virtue, are being penalised.
We insist that the only solution for the problems of the textile industry is severe, calculated import restriction. It was suggested earlier that developing countries would be penalised by such action. Some, though not all, textile imports come from poorer countries. I strongly favour an increased aid programme to emerging nations, but this should be direct aid. It is scandalous that one sector of the community should provide an easy conscience for the rest of the nation by accommodating this problem. We should trade with developing nations and encourage a revised framework of trade with fair international agreements. Trying to deal with the problems of the Third World by creating unemployment in developed nations is totally unacceptable.
The home textile industry provides employment, directly or indirectly, to hundreds of thousands of people, many of whom live in areas of traditionally high unemployment. In some areas, 30 per cent. of those in employment are working in the textile industry. About 3,000 have been made redundant this year and 50,000 have experienced various periods of unemployment. This is against a background of 60 per cent. penetration of the home market by foreign textiles.


Two mills are to close in a matter of weeks, putting 600 people out of work. I have a lingering horror of unemployment. I was a schoolboy in the 1930s and I can still taste the misery of those days and the lack of dignity as well as income. I cannot forget or forgive those responsible. My attitude has not changed, whatever Government have been in office.
The propositions I am putting forward have the merit of simplicity. They have the support of the unions and the industry generally. We insist that cotton yarn be removed from the EEC liberalised list. We should establish a Government purchasing agency for yarn and fabric through which all buying would be conducted—it would cost little and could be brought into effect by the NEB. The introduction of severe import restrictions for textiles and a wide range of other commodities has become inevitable.
We have been told that the reason we should support the Government's anti-inflation measures is that they carry the seal of approval of the TUC, but that same body is also forcibly pressing for import controls. If its voice is valid in one area, it must be equally valid in others. It is the same voice advocating the same overall economic policy. The Government cannot be selective by approving the TUC's guidance on some aspects of policy and ignoring it entirely on others.
The use of import controls is an inevitable ingredient in our battle against inflation—better we use the weapon sooner than later, because later may be too late. We look to the Government for immediate and decisive action. It is not only the survival of the textile industry that is at stake.

Mr. Deputy Speaker (Mr. Oscar Murton): The Chair understands the importance to hon. Members of speeches concerning their constituencies. I appeal again for speeches of six or seven minutes—not more.

10.45 p.m.

Mr. Ian Percival: The Government must surely have been impressed by the unanimity of view and multiplicity of examples presented from all parts of the House. If they are not moved to action now, nothing will ever move them.
In my constituency there are factories which are equipped with the very best

knitting machinery, administered by first-class management and manned by workpeople who are skilled, hard working, responsible and moderate in the return which they accept for their efforts. But those people are under-employed, and if we are not careful they will be unemployed.
There are two identifiable reasons for this situation. One is that in this sphere imports are being brought in at a price which can only be the result of sweated labour to a degree which would horrify us here. The second reason is that we are being called upon in this part of the industry—and I speak only of this part since it is the only part of which I have direct knowledge—to bear a wholly unfair portion of the burden falling on Europe. Will the Government not urge our European partners to share the burden more fairly?
There are answers to these problems and they will be found because they must be. Let it not be left too late before action is taken. The necessary steps must be taken now. My plea to the Secretary of State and the other members of the Government is this: for God's sake stop it now before these people of ours, and their machines, are thrown on the scrapheap.

10.47 p.m.

Mr. Doug Hoyle: I hope that this debate will not be regarded by the industry as so many bromides, expressed while mills continue to close. Great play has been made about the two spinning mills which are to close in the near future. As the debate was beginning I received a telegram from my constituency which told me that Bairtex Ltd at the Black Corr Mill, Trowden, a special purpose mill established only four years ago, was due to close. The telegram went on to refer to
beef and butter mountains and wine lakes—why not Government-controlled buffer stocks for textiles?
As it also says in the telegram "imports do kill" and they are putting on the scrapheap 81 people in a very tiny village in my constituency. There is no possibility of employment being found for these people in the near future. It is time the talking stopped and we had some action.
We listened carefully to the Prime Minister's statement and to that by the Secretary of State for Trade on 23rd July. But the industry is still demanding


acceptance of the fact that as long as imports take up 60 per cent. of the home trade there will never be a viable home textile industry, and we shall continue to hear about mill closures. It has been said that the only answer is import controls. But that means import controls not only for textiles but for footwear, for cars, for glass and for electronics.
We are arguing about the Government's economic policy. It is of no consequence to the people of Trawden who will be unemployed on 29th August to know that the battle is being waged against the orthodoxy of the Treasury. There is no doubt that in six months' time we shall get the selective import controls, but they will be far too late for those people.
In his statement my right hon. Friend the Prime Minister mentioned the Government purchase of existing stocks in this country. May we develop a little more the idea that has been put forward tonight about a Government purchasing agency composed of employers, trade unions and representatives of the Government, so that when the stocks are bought up there is close liaison with those responsible for import licensing in the Department of Trade? Moreover, may we have an assurance that when an application is made for an import licence it will not be granted if the material—either yarn or cloth—is available from the stocks? Such a scheme would materially benefit not only the industry, but employment in the industry and surely that is a very sensible thing to do.
If we talk about anti-dumping measures I must reiterate what has been said on previous occasions. Why do we not follow the example set by other countries? If there is a charge of dumping let us put the onus on the importer. In the meantime let the stocks lie on the quayside. When it is said to a manufacturer in this country that he must prove that dumping is taking place, he is often out of business before the ink is dry on the paper that is being prepared for the Department. The damage has already been done. The textile industry's complaint is that we act too little, too late.
In view of the time, I simply say that for far too long the textile workers of this country have given so much in time of war and peace, but they have received

little from successive Governments. Time is short. Unless meaningful action is taken along the lines that I have set out tonight concerning import controls, we shall not have many more debates on the textile industry, because there will not be a textile industry to debate.

10.53 p.m.

Mr. Giles Shaw: It is abundantly clear that the anxiety about the Government's measures announced in July was that they do not help the short-term problems of the industry. The industry clearly believes that some restrictions on cheap imports is the major problem. Given the downturn in the United Kingdom economy and the general restrictions in world trade, it is not surprising that attention should be riveted on this aspect.
Clearly the Government do not yet accept that there is a case for controls. The Department of Trade's natural fear about retaliation—as has occurred certainly in the cases of Turkey and Greece—is paramount over the Department of Industry which has responsibility for the maintenance of jobs within, and the viability of, the textile industry.
However, the Department of Trade must offset the benefit which it clearly sees to our export trade, by avoiding retaliation in the short term with the consequential loss to our export trade in future years if the wool textile and other textile industries collapse. We cannot have the benefit both now and later by pursuing the same policy.
Turning to the wool textile industry's problems I point out that I represent the constituency of Pudsey where the wool textile industry is extremely important
The main attack I make on the Government, with all the genuineness I can command, is that they have so far failed to grasp the need to maintain the existence of small specialist firms. Some spinners and weavers are large companies, but dyers and combers, fabric printers and top makers are usually small, and in some cases very small companies. These companies are particularly vulnerable at the present time. Yet they are essential as suppliers and processors to the whole industry—large companies as well.
We have in these smaller companies skilled manpower and expertise which,


once disbanded, can never be recovered. The Government must look again at giving guarantees, perhaps by funding under the Industry Act, to enable small companies to back their bank borrowings.
On investment allowances, much has been done with the £15 million allocated under Section 8 of the Industry Act to the wool textile industry. I understand that £6 million of that sum still remains. But, in view of the closures to which reference has already been made—at least nine companies are reported to have closed down in last month's issue of Wool Record and Textile World—severance pay and other benefits may use up the residual amount under the Industry Act.
The closure of small firms is a serious, rapid and growing situation. It is exacerbated by another element introduced by the Government—namely, the intention, through the Factory Inspectorate, to replace guards on carding machines, which was mentioned by my hon. Friend the Member for Ripon (Dr. Hampson). This will cost the wool textile industry £5 million with no return to the companies concerned and probably with a loss of productivity. I understand that to qualify for aid under the Industry Act scheme a threshold of £50,000 is the minimum level at which a claim can be made. Clearly that is too high. I ask the Government to consider lowering the threshold limit for claims under this section of the Act so that small companies can apply for funding.
A mill in Pudsey, owned by Clough Ramsden & Co. Ltd., closed last week. In a Press statement the management said:
A further contributory factor affecting our decision has been the Factory Inspectorate's insistence on the full height side guarding of our carding machines which, although providing improved safety, would have involved us in crippling expenses for which there would be no monetary return.
I further understand that aid is available to small firms in development areas to enable them to hold labour. Will the Minister consider gazetting West Yorkshire as a development area or possibly extending the scheme exceptionally to the textile industry?
I have drawn up for the Minister's considerataion a 10-point plan of action for wool textiles.

First, it is desperately urgent to reduce quotas of foreign fabrics and made-up garments, particularly from Comecon countries and Southern Italy, by firm negotiation.
Secondly, the Government should re-introduce the country of origin labelling regulations.
Thirdly, the Government should use the Price Commission to check against profiteering on profit margins of cheap imported materials.
Fourthly, the Government should set up a guarantee fund to help smaller industries to cover bank borrowings and to prevent the disbandment of skilled labour.
Fifthly, they should review the industrial aid under Sections 7 and 8 of the Industry Act to allow the cost of small schemes to be eligible for grants.
Sixthly, they should consider giving development area status to West Yorkshire.
Seventhly, they should encourage the ECGD to be more flexible in covering export costs—for example, travel costs, which are a high burden for small firms.
Eighthly, they should instruct, not exhort, State trading undertakings to buy British textiles.
Ninthly, they should consider setting up a joint committee representing the industry, the Department of Trade and the Department of Industry to monitor developments over the next crucial 12 months to ensure that problems are detected before they become critical.
Tenthly, they should consider expanding the Industry Act scheme into 1976 as it is due to expire at the end of this year.
I welcome the Government's recognition that the wool textile industry, which pioneered the industrial revolution in this country, is well able to withstand fair competition and fair pressure of economic difficulties. But when excessive competition and excessive economic circumstances coincide, the Government must recognise that special solutions are required. Those solutions are available if the Government act with urgency.

11.0 p.m.

Mr. Raymond Fletcher: My only intention tonight is to transmit,


unprocessed, the views of my constituents to this House and to the Government. Everything that needed saying about the state of the industry has been said and everything that had to be demanded of the Government has been demanded.
In short, the debate has been a set of free variations on the basic theme of import control. I have no intention whatever of adding my own set of variations to that theme. However, I should like to refer to a town with which my hon. Friend the Secretary of State for Industry is familiar. I was there on Monday and the people of that town made one comment about the Government. They said "We have been getting a little fed up with the Government and we were totally fed up with the previous Government." I asked them what kind of Government they would like and they said "We would like a Japanese Government, because Japanese Governments break all the rules, they get things done and they are totally ruthless in the defence and pursuance of Japanese interests."
When I explained to the good citizens of Alfreston that this was not possible, they suggested a compromise, namely that through my European connections I might import a French Government into this country and seat them on the Government Front Bench. As everyone knows, French Governments are not only ingenious, but they are equally ruthless in the pursuit and defence of French national interests. That is one very strong opinion.
However, my right hon. Friend the Secretary of State for Industry in a previous incarnation in a previous Government once rescued my constituency from total collapse. He will recall the action that he took. There were once 16 coal mines in my constituency and all have now been closed. New industries, many of them related to hosiery and knitwear, were introduced into the area thanks to the efforts of my right hon. Friend in a more junior capacity. It is a great mistake to judge my right hon. Friend on his speeches. [Laughter.] I am speaking seriously and I cannot understand the hilarity at all. I ask my right hon. Friend to act now, as he did then—my constituents expect it.

The second point of view which I want to express relates to a statement made by Mr. Tom Richardson, the chairman of the Ilkeston District National Union of Hosiery and Knitwear Workers. I quote from an article in one of my local newspapers, the Ripley and Heanor News.
The recent agreement with Hong Kong (restricting that country's imports to 1974 levels) is some measure of relief, for the signs were that the whole home industry was collapsing under the enormous pressure. That calamity may still occur and we would all do well to consider the implications of this on our society—for this is no paper bag or chocolate box industry—this is a part of one of the great staple industries of modern society.
Everyone needs to be clothed—so are we moving to a position where we rely utterly for our clothing needs on countries so unstable as those mentioned"—
he is talking of Hong Kong, Taiwan and South Korea—the one, a crown colony, operating on a tenuous lease, the other two surviving only by reason of an American presence.
My right hon. Friend will recognise those sentiments. They were once forcibly expressed in 1967 by those workers for whom he has been so rightly praised for doing so much. The miners said that in 1967 about the fuel policy a previous Government produced: how fatal it would be to be so dependent on foreign sources for a vital part of our energy supplies. The miners were ignored by the then Government because they dropped their aitches and had not been to Oxford and Cambridge. They happened to be right.
So with the hosiery workers. How well my constituents express themselves. I expect the Editor of The Times to replace me and find someone else from Ilkeston.
I shall not add a drop to the milligrammes of statistics which have poured into the debate. I merely ask the Secretary of State for Industry to act now, as he once did in a previous manifestation, to save, not only mine but all the other constituencies affected by the crisis which does not arise from the deficiency of the industry.
This is a good industry with good price levels and good labour relations. It does not suffer, except by attack from outside. When we talk of the outside world, let us dispense with odious sentimentality about the Third World. I owe no obligation to the 77 nations inside the


United Nations when they turn it into a general assembly of barbarians. I owe no obligation to them whatever. Charity, like industry and everything else, must begin at home.
I could say a lot more, Mr. Speaker, but I obey your instructions.

11.7 p.m.

Mr. Jim Marshall: I wish to refer to the knitwear workers and I remind my hon. Friend the Member for Ilkeston (Mr. Raymond Fletcher) that some of us are in direct contact with the people who represent hosiery and knitwear workers and they will have to rely on newspaper reports of statements made by individuals.

Mr. Raymond Fletcher: Mr. Raymond Fletcher rose—

Mr. Marshall: Time is short and we must emphasise the difficulties which hosiery and knitwear workers are facing in the context of the textile industry and of manufacturing industry at large. When the Secretary of State was opening the debate, he indicated that the problems which the textile industry faced were similar and of the same order of magnitude as those facing British industry generally.
I have pointed out before the problems in hosiery and knitwear industry which is essentially centred on the East Midlands, and of the loss of jobs, which is twice the national average. Between December 1974 and May 1975, 7·2 per cent. of jobs were lost in that industry compared with the national average of 3·6 per cent. That is the difference between hosiery and knitwear and manufacturing industry at large. The life-blood of hosiery and knitwear is flowing away at 1 per cent. of its jobs per month. No industry can continue to suffer that. If it continues much longer, the closures taking place and the great personal hardships will be to no avail because the future viability of the industry will be beyond repair.
That is the difficulty facing the industry. I said that a large percentage of the hosiery and knitwear workers are in the East Midlands. One in eight workers in the East Midlands works in the hosiery and knitwear industry. The present unemployment figures in the East Midlands show the effects of the decline in the industry. The East Midlands has

historically been a low unemployment area. But if my right hon. Friend looks at places such as my own city of Leicester, where again historically the unemployment rate has been way below the national average, he will find that it is now much above the national average—5·2 per cent. compared with 4·7 per cent.—and that the increase over the past 12 months has been 160 per cent. If that rate continues I fear for the economic future of the city of Leicester in particular and of the East Midlands in general.
What can the Government do? They certainly must do something about the situation if the industry is to survive. I support all my hon. Friends who have urged the Government to introduce import controls. They can be introduced, but the political will to do so is needed. I believe that the Government's incomes policy will mean that within the next few months they will have to introduce selective import controls, because they are reducing consumption. People still have to pay the rent, to buy food and pay the increased gas and electricity charges which my right hon. Friend imposed some months ago. Therefore, there will be little money left to buy hosiery and knitwear goods. Demand for them will continue to decline. Let us introduce import controls now, while there is still an industry, rather than leave it for four or five months, when the industry may well be beyond repair.
I wish to make a suggestion which I hope the House will not dismiss as a political gimmick. In previous years old age pensioners and those on supplementary benefit received a £10 Christmas bonus. I agree with the Government's decision to do away with it, but if they continue to turn their face against import controls they must stimulate demand for home-produced textiles. One way would be to provide old age pensioners and those receiving social security benefits with, say, a £5 textile voucher. The right hon. Member for Down, South (Mr. Powell) smiles—

Mr. J. Enoch Powell: I was thinking of Charles II's law that corpses must be buried in wool.

Mr. Marshall: —but if that could be done at a cost of £40 million to £80 million, it would stimulate demand for British-produced textiles. I believe that


the net cost would not be great, because people would still be employed in the industry, paying income tax, and there would be a saving of the social security payments that would have to be made to them if they were put out of work because of the increased penetration of low-cost imports.

11.14 p.m.

Mr. Ted Fletcher: I have a particular constituency interest in the debate, because the firm of Paton and Baldwin is an employer in my constituency. It has recently had to reduce its labour force by 240, and, in line with many other textile firms, it has been working short time for many weeks.
Darlington has always had a fairly high level of employment, even though it is situated in a development area where unemployment is normally twice the national average. The cut-back in employment in the textile industry, added to a further 250 redundancies in a large engineering firm, has meant that the town now faces unemployment levels that it has not known since the war.
In spite of the optimistic noises made by my right hon. Friends the Prime Minister and the Secretary of State for Industry, the textile industry continues to deteriorate. The Secretary of State has not addressed himself to the central theme of this debate—the universal demand from hon. Members on both sides of the Chamber and management and trade unions that the Government should introduce a measure of import control. It is suggested that the imports of textiles and clothing should be reduced by 20 per cent. in value for a period of one year. That is not a revolutionary proposal. No one suggests that it will solve all the problems of the textile industry, but it will lead to an increase in demand in the home market.
The Secretary of State is totally isolated from the House of Commons. A call for import controls has been made from both sides of the Chamber. It seems that the Minister and his colleagues listen more to the Treasury than to the voice of the House of Commons. I hope that as a result of this debate, and the call from both sides of the House for him to investigate the possibilities of a temporary measure of import controls, he will change his mind.

Even the Prime Minister seems to be afraid. Reference was made to his article in Time magazine, in which he said:
we are not going to sit back and watch a remorseless increase in unemployment. If the slump does not improve quickly we will obviously resume our right to protect our balance of payments by various means.
Unemployment in the textile industry is remorselessly increasing. Almost one-quarter of the work force is on short-time working. Thousands are being made redundant each week. Now is the time for us to consider the other means to which the Prime Minister referred. Do not let us be misled by the reference made by the Secretary of State to the fact that we should revoke our treaty obligations if we imposed import controls. That will not be the position. There are facilities for us to contract out of our international obligations. My right hon. Friend knows that there are escape clauses in those obligations. Countries with exceptional balance of payments difficulties are allowed to take unilateral action on imports under Article 12 of the General Agreement on Tariffs and Trade and Article 190 of the Treaty of Rome.
There are many precedents for that. Italy, for example, recently instituted an import deposit scheme as a result of her economic difficulties and balance of payments problems. That was accepted by her EEC partners. There is no reason why we with our tremendous balance of payments problems, should not take similar action. The Minister need not fob us off by saying that it cannot be done. It can be done if the Front Bench have the will to oppose the Treasury and listen to the House of Commons.
I therefore put forward a plea on behalf of my constituents. This is not only an economic problem. It is a human problem in terms of the people who have invested their lives in the industry, and who, after working for many years in the textile industry, have been thrown on to the scrapheap.
I add my voice to those of my colleagues on both sides of the House in saying this to the Secretary of State. Let us have some action. We shall not be satisfied in the long recess if action is not taken. Eight weeks must pass before we can discuss this matter again. We want action taken now. Our constituents


demand immediate action. I hope that the Minister will give us these assurances when he replies to the debate.

Several hon. Members: Several hon. Members rose—

Mr. Speaker: Order. Before calling upon the hon. Member for Cheadle (Mr. Normanton), I want to express my gratitude to the House. The Chair has called 29 back-benchers in the course of the debate and, if I may say so, greatly daring, it shows the moderation of those who speak for these important industries.

Mr. Nigel Lawson: On a point of order, Mr. Speaker. We have just had three speakers one after the other from the Government side of the House, despite the fact that my constituents in Blaby are affected by the recession in the industry—

Mr. Speaker: Order. I was not aware that the hon. Member wanted to speak.

11.20 p.m.

Mr. Tom Normanton: We are coming to the end of what I feel sure everyone in the Chamber at this late hour will agree has been an extremely useful debate. It has given added emphasis to the statement we have made so frequently that there is unanimity to be found across party politics when we come down to the stark reality of the way in which the men and women of this country earn their daily bread.
I am, therefore, reluctant to be somewhat partisan, but many may have asked themselves in the course of the debate whether it is purely by accident, by bad management of the business of the House or by intent that we are debating the state of a major industry—the footwear and textile industry of Britain—at this late stage in the parliamentary programme, a programme which has been so heavily over-loaded by business, much of which has been at best irrelevant to the well-being of industry in general and textiles in particular and at worst inimical or downright prejudicial—a point which my hon. Friends the Members for Wells (Mr. Boscawen), Wellingborough (Mr. Fry) and Ripon (Dr. Hampson) made most effectively. I shall try to eschew party politics for the rest of my summing up.
To comply with parliamentary protocol I have to declare an interest. I have a

lifelong interest in textiles, both by way of private business and national and international industrial agencies.
The history of Lancashire textiles—and that is what many have been referring to though spreading the net much wider—is of a long series of stepped run-downs from a position in which this great textile industry employed, directly or indirectly, well over 2 million men and women to a mere fraction of that total today. Every step down has been the occasion for appeals to Government—whichever Government are in power—for action in areas in which Government only can and should operate to cope with the inevitable, inexorable rising tide of the influx of imports.

Mr. J. W. Rooker: I am having great difficulty in listening to the hon. Gentleman because of the loudness of voice of the hon. Member for Blaby (Mr. Lawson).

Mr. Normanton: First, going back a long time, there was the appeal for the repeal of the Ottawa Agreements. Governments resisted that because they felt that they had to stand firmly by agreements which had been entered into internationally, although they were agreements which were totally irrelevant to the industrial and commercial climate of the time when the appeals were made.
Secondly, the industry was driven by Governments to negotiate industry to industry, which was a scandal. It is a classic example in industrial negotiating terms of an industry having to negotiate unilaterally with its own commercial executioners.
Thirdly, Governments promised that they would help the industry if the industry would trim itself down to what they said was the right size. Three times that operation took place, but still the same comments come from Ministers. They still cannot state categorically that the industry is of the right size and must be contained at that size for the future.
Fourthly, the Government have been insisting repeatedly upon the industry itself investing capital and expertise in the redeployment of all those engaged in it. They have been fully supported by all who are engaged in the industry, whether it be employers or trade unions, thanks to the unique industrial relationship which


exists. I know that my colleagues would like to pay their respects to those trade union leaders who have given their service to the industry on a non-partisan basis.
Fifthly, Governments have promised action in the past on quotas and tariffs to deal with rising imports, but every time they have insisted upon the insertion of safeguards for the interests of foreign producers by guaranteeing annual increments regardless of the state of trade at home or in the world at large.
Sixthly, all Governments have refused to declare publicly what most if not all of us in the industry have felt—namely, that in pursuing and developing patterns for restructuring and development the textile industry is still deemed to be expendable. We are told repeatedly by different Ministers under different circumstances—basically the message has always been the same—that the industry must move into more sophisticated areas of technology such as jet engines, telecommunications, televisions, automotive products and the like, but how many faces have blushed with embarrassment when we have looked back over the past five or six years and considered the instructions and admonitions given to the textile industry over the past 20 years or more?
Against that background I want to be as constructive as possible. That would be strictly in conformity with the general spirit in which every right hon. and hon. Member has made his observations during the debate. Despite the interpretations which it is possible to construe of the representations made by certain sectors of the textile industry, it is not true that the two major industries of textiles and footwear seek feather-bedding or full protection. They have never sought such treatment. That is not the climate in which they wish to compete, because they are industries which are competitive by nature. They operate in a world which is textile-product oriented. Their market, and the background against which they operate, must be the world, and it is a competitive world. However, as my hon. Friend the Member for Northampton, South (Mr. Morris) has said, there is all the difference between fair competition and the kind of competition the footwear and textile industries have had to face, and particularly when trade is bad. The

cyclical character of the trade is such—this has always been so on a world basis—that when trade is bad anywhere it is inevitably bad everywhere.
Surely the objective of Government should be to create the right kind of economic climate and provide the right form of governmental machinery within which competition can operate fairly and effectively. First, I believe that the regulation of international trade in textiles must be by means of quotas and modest tariffs. However, in a weak market those quotas effectively guarantee an outlet for the products covered by the allocation. In other words, they give an effective guarantee to those who are supplying imported goods into this country. The home industry, whether it be textiles or footwear, bears the full burden of trade depreciations and recessions when they come.
We know that recently the textile industry, through its official channels, has demanded a 20 per cent. cut-back right across the board to deal with the current situation. I must confess that I cannot indict the Government for taking fright at such a demand and being extremely reluctant even to give it more than superficial consideration. But I am bound to admit that they recognise, as the industry recognises, that were that to be done across the board, it would be inappropriate and slow to act. What the industry wants is action which is urgent, immediate and effective.
I believe that there must be a genuine procedure for dealing with dumping. The Government deceive themselves, and are irresponsible if they succeed in deceiving the country, if they believe that the past and present machinery is any better than a farce or an insult to intelligent people who have to work for a living and do not write intellectual treatises in ivory towers.
Having taken part in many of the perennial ramblings with the Board of Trade and later the Department of Trade, when proof had to be produced, I recall a particular experience. An importer of Chinese textiles called on me and threw down four samples of cloth. He asked me, "How much?" He told me, "Name your price. I have millions of yards to sell. We want currency." That incident highlights one of the many factors with which our own industry has to compete.

Mr. Cryer: Did the hon. Gentleman buy it?

Mr. Normanton: I did not. The Secretary of State will be aware that at that time Chinese cloth was under very strict control. The point is still valid, however. Whether the cloth comes from China or Pakistan or elsewhere, there is often in effect a two-price system with which our producers cannot hope to compete. It is fair, and not unfair, competition that we should ask our industry to challenge and meet.
The Department has always insisted on written evidence. That is like requiring John Citizen, when finding a burglar in his house, to hold out by law a declaration of guilt for the signature of the burglar. It is idiotic, fantastic and irresponsible.

Mr. Madden: Will the hon. Gentleman clarify the position of the Conservative Party on the issue of import controls? The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) indicated some support for import controls. Does the Conservative Party now join the Liberal Party in supporting selective import controls? If so, that policy seems at variance with what the Leader of the Opposition has said.

Mr. Normanton: I have no intention of spelling out tonight for the benefit of the hon. Gentleman or of the Government the precise terms of the policy of the next Conservative Government for textiles. I hope the House will be clear before I finish as to what I believe should be the basis of a textile policy that should be pursued.
Textiles and footwear fall into the same category. The procedures and promises of support against dumping are effectively not worth the paper from which the Secretary of State read his statement a few days ago, however well-meaning and honest his intentions are towards these industries.
Many right hon. and hon. Members have voiced a very special and particular fear which I do not think was voiced by the Secretary of State either in this debate or in the previous one. Britain and free Europe are moving into a new economic ball game and an era in which expansion of world trade means an increase in the flow of goods manufactured in State trad-

ing countries, where costing and pricing as we know it in the Western world is on a totally different basis. There is no such thing as a market price as we know it for a pair of shoes in Russia or Bulgaria. The price for that pair of shoes exported abroad to the free world is the price at which the Iron Curtain country producer can effectively sell. The cost of production is totally irrelevant to the transaction. This is the new ball game into which international trade is now moving.
Tonight we have been talking about shoes, footwear, shirts, cloth and yarn, and yet exactly the same is happening in high technology areas such as television sets, radios, semiconductors, cars, trucks and many more advanced technological products, a point which has been mentioned from both sides during the debate. What is happening to textiles and footwear today will happen to every major industry in Western Europe unless the right sort of policies are prepared now.
No Government should, however—I am sure that most, if not all. Members of the House will endorse this—protect its industry from incompetent management, from wilful or irresponsible behaviour of any sector of any industry, from the refusal of any industry to be technically dynamic or from a refusal of any industry or concern to face up to the world forces of fair competition. The textile and footwear industries do not fall into any of these categories, as every contribution from both sides of the House tonight has confirmed.
The House has tonight given a warm welcome to the GATT Multi-Fibre Arrangement, but the record of the Government's part in the negotiations with Brussels makes dismal reading. If every member State dragged its heels as Britain did prior to the referendum, the progress for the future of the Community would be very sad.
I hope that the Under-Secretary will reply to a number of points. I hope he will give an assurance to the House and a pledge to the textile industry to guarantee here and now a commitment to the extension and improvement of the Multi-Fibre Arrangement. The extension should be both in terms of time—that means beyond 31st December 1977—and in scope by the inclusion of footwear. It can be done. It is realistic. It is


certainly highly desirable. The improvement of the MFA should be by introducing an automatic regulating mechanism, to which I have referred, which would spread the burden of economic recession equally and fairly between foreign suppliers and domestic industry at the time it is needed most, when depression is there.
In another context the House must, I am sure, support the appeal of my hon. and learned Friend the Member for Southport (Mr. Percival) when he appealed for burden-sharing. Admittedly that is a fine-sounding phrase, but the Government must turn this into a reality within the framework of the EEC knowing that it will now command the full support of both sides of the House, not only in this House but in the European Parliament.
My hon. and learned Friend the Member for Darwen referred to the Government's proposal to help the clothing industry. This offer may have evoked gratitude from the EEC. My hon. and learned Friend referred to many other points but he particularly referred to the Government proposing to help the clothing industry. The Industry Act, to which I am solidly and irresistibly opposed—I am on the record as having opposed it in 1972—may be an excellent channel for pushing out taxpayers' hard-earned cash, but I would question whether the taxpayers will see much for their money. They are more likely to get Government demands for yet more money. The makers-up are not specially famous for their assistance in regard to the use of United Kingdom cloth, with one or two outstanding exceptions. This was a point made by my hon. Friend the Member for Macclesfield (Mr. Winterton).
The question the Government must answer is how they propose to spend their £20 million, what they expect to achieve, and whether it will make the textile industry more effective.
The right hon. Gentleman the Secretary of State hinted at further sums of taxpayers' money being considered for other sectors. What are these areas and commitments?
Lastly, we believe that it is the height of folly to ignore the consequences of the record and never-ending stream of

legislation and policy decisions of the Government. These policies have only one certain result—the debilitation of British industry and enterprise in general and of small and medium fibre business in particular.
The motto for this Government is "Too little too late." We ought to have more deeds, and less words and less legislation.

11.42 p.m.

The Under-Secretary of State for Trade (Mr. Eric Deakins): Until the last speech I should have said that this had been a well-informed debate and also—I do not exempt the last speech—a very serious one, because we are dealing with a very serious problem in two of our major industries.
Hon. Members on all sides have spoken from the heart, and, as the hon. Member for Nelson and Colne (Mr. Hoyle) and the hon. Member for Darlington (Mr. Fletcher) reminded the House, we have been concerned throughout with people, particularly the constituents of hon. Members who have shown here the feelings generally of people in the textile, clothing, hosiery and footwear areas of this country. There is hardly a constituent who works in these industries who has not been represented here tonight by the comments either of his own Member of Parliament or of some other hon. Member.
I want first to deal with a number of the specific points which have been put to me and then to go on to develop the theme of import controls, the Government's attitude to them, and the Government's reasons for the policy they have adopted. I should also like to deal with footwear, because I have had an important meeting today with representatives of the footwear industry.
The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) asked about the Government's temporary employment subsidy announced the other day. This subsidy is available to firms in assisted areas, that is, intermediate areas, development areas and special development areas. It will be open to firms in the textile, clothing and foowear industries in such areas provided that the number of workers involved is more than 50.


This could be an extremely valuable form of short-term assistance to the industry, but I am well aware of the fact that there are many parts of the footwear industry in particular, and the textile industry as well, I suspect, which are not covered by this particular geographical coverage.
I have been asked about origin marking. Foreign goods have to be marked with the country of origin if there would otherwise be a presumption that the goods come from Britain. A pair of ordinary shoes made in, say, Poland, do not at present have to bear any mark of origin to say that they have been made in Poland. But if, say, they were called "Hush Puppies" and had been made in Poland they ought to say so. This is the sort of matter for which the Secretary of State for Prices and Consumer Protection is responsible, and I shall undertake to convey to her the feelings of hon. Members who have spoken on this particular point.
Mention was made in several speeches of an Italian firm in connection with woollen textiles and an anti-dumping application. I intervened in the speech of the hon. and learned Member for Darwen on this point. It is a fact that, as an EEC member, we cannot take independent action against a fellow EEC member. We have to go through the normal machinery of the Commission. So far, we have had no application for an anti-dumping case against this firm in Italy. If the industry wanted to promote a case, it would have to go through the Competition Directorate in Brussels. That Directorate might not agree that selling more cheaply in one part of the EEC than in another necessarily constituted dumping. The competition would have to be shown to be unfair by EEC rules, and the United Kingdom industry would also have to show that it was adversely affected.
The hon. Member for Rochdale (Mr. Smith) and a number of my hon. Friends talked about the setting up of a textile purchasing agency, and reference was made to stock-building. The idea of a purchasing agency is a variation of the stock-building scheme which was examined in detail following the statement of my right hon. Friend the Prime Minister on 23rd May. After extensive consultation, the advice from the overwhelming

majority of the industry was that a stock-building scheme would be of no benefit, primarily because an increase in stocks could further weaken the market. The TUC's Textiles, Clothing and Footwear Section has not included stock-building, either public or private, in its own specific proposals for Government action.
I have been asked about preshipment finance. It is a fact that in the main the banks have ample funds available at present for credit-worthy customers and, generally, there should be no difficulty in obtaining finance for exports. There may be problems in obtaining finance for large-scale and expensive exports, especially of capital goods, and my right hon. Friend the Secretary of State for Trade has today in a Written Answer given details about a scheme to assist in this area. However, it is not intended that this scheme should cover normal exports of consumer goods.
The hon. Member for Wellingborough (Mr. Fry) asked about the recent agreement with the Soviet Union and whether footwear could not be a part of that to provide a bigger export market for our hard-hit footwear industry. I shall look into this matter and write to the hon. Gentleman about it. There are a large number of specific industry sectors set out in a Protocol to the agreement and in the terms of the Joint Commission that we have with the Soviet Union under our co-operation agreement. It may be that footwear is covered. But I will write to the hon. Gentleman about this.

Mr. Jim Lester: The hon. Gentleman may be interested to hear that the footwear industry has itself already started to move in this direction.

Mr. Deakins: I am grateful for that information.
My hon. Friend the Member for Keighley (Mr. Cryer) raised an important point about the agreements being signed at present with developing countries under the MFA on behalf of the Common Market. So far, there are three agreements initialled and in operation with Hong Kong, Pakistan and India, and the Community has issued a regulation on imports from Taiwan which will have the same effect as an agreement. There are many other agreements in train. In an intervention, I mentioned our attitude


to the potential agreement with South Korea. Negotiations are still going on today, for the third day running, in Brussels. I hope that there will be a satisfactory outcome by the end of this week. If not, we stand by all that my right hon. Friend said on 23rd July, ready with our Community partners if necessary to take appropriate action to defend our interests.
The hon. Member for Ripon (Dr. Hampson) and the hon. Member for Pudsey (Mr. Shaw) mentioned the guards for woollen carding sets. It is necessary to maintain the position. I am sure that the House will share the view that safety measures are the responsibility of the employer. Wool textile firms which are undertaking a project under the wool textile scheme which qualifies for assistance may add the cost of these guards to their project costs. But no assistance is given at present solely for installing these guards.
The Chancellor of the Duchy of Lancaster had talks with the British Textile Confederation on 12th June and agreed that we should give this matter further consideration, but I can give no commitment that the outcome will necessarily be favourable to the industry.
There have been demands from all sides for import controls. The attitude of the official Opposition on this matter is a little unclear. The hon. and learned Member for Darwen said he was in favour of temporary import controls, but the hon. Member for Cheadle (Mr. Norman-ton) was not so certain. The Government have to govern and it is not our responsibility if the Opposition have no policy.
To hear some hon. Members talk, one would think there was no protection for the textile and clothing industries in this country and that somehow they had been callously abandoned to their fate by this Government and previous Governments. These industries enjoy a far greater degree of protection from imports than any other manufacturing industry in the private sector. Imports of spun cotton yarn, woven cotton textiles and made-up clothing from most low-cost sources are subject to quantitative restrictions. So, too, are woven polyester-cotton products imported from Hong Kong, South Korea, Taiwan, Colombia

and Thailand. Last December the Government imposed restraints on cotton yarn imports from Turkey and Greece. Last month duties were reimposed on imports of woven outer garments from Portugal. And this is not a complete list of the restrictions which apply at present.
Within the terms of the GATT Multi-Fibre Arrangement, existing restraints on sensitive imports will be maintained and in some cases extended to cover textiles and clothing of all types of fibre. That is the pattern of the three agreements referred to in reply to my hon. Friend the Member for Keighley. After an admittedly slow start, better and more speedy progress is now being made in the Community's MFA negotiations with low-cost suppliers. For the first time so far as the United Kingdom is concerned these arrangements will bring under restraint wool products such as knitted sweaters and suits. Under the MFA, the industry will enjoy a greater degree of protection than it has ever had before and for that reason it has met with the approval of the TUC Textiles, Clothing and Footwear Committee which sees it as providing the basis for a long-term policy which will achieve both stability and confidence.
A number of hon. Members mentioned burden-sharing and I have been asked for detailed figures. The textile and clothing industries stand to gain from the EEC's burden-sharing arrangements which are now coming into play under the MFA agreements. Since traditionally the United Kingdom has been the biggest importer from India, Pakistan and Hong Kong, we shall face only a nominal ½ per cent. growth per annum for many items—substantially less than most other EEC members and substantially less than under our previous arrangements with these countries. Benefits from these arrangements will take some time because some countries in the Common Market, particularly France and Italy, have adopted a closed door policy to textile imports from developing countries and it will take time to prise open those doors, but that is the path on which we are set under the MFA.
Import controls have been the major theme in the debate and hardly one hon. Member has not said that he wants selective or general imports controls.

Sir G. de Freitas: I do not.

Mr. Deakins: I beg my right hon. Friend's pardon. The Prime Minister explained on 23rd May that we had decided against the industry's proposal for a unilateral, across-the-board cut of 20 per cent. on the 1974 level of textile imports. There has been some reluctance to accept the position, to put it mildly, and pressure on the Government to impose import controls is building up again, not merely from my hon. Friends, but from the Opposition side. I shall be interested to see how long it will be before the official Opposition are asking for these controls.
It might help if I briefly reiterate the main arguments against either selective or across-the-board import controls. My remarks apply not merely to textile but to many other industries. A first and obvious point is that they would be a very blunt and inflexible instrument. In some sectors cuts would be totally inappropriate and harmful to domestic interests. Many firms which rely on semi-processed imported materials would face supply problems, and the consequence would be a further loss of employment.
Secondly, textile imports have been declining as part of the world recession, and this downward trend had begun well before the British Textile Confederation made its proposal early in March. So far this year the volume of imports has been well down on last year. In some sectors the fall has been even greater than the 20 per cent. demanded by the BTC. If we had adopted the BTC proposals in March the overall volume of imports would not have been greatly lower than they were anyway in the first six months of this year, and the consequential benefit to employment would have been correspondingly small. Furthermore, import restrictions could well undermine progress which we hope will be made in the GATT mutilateral trade negotiations which are currently going on. It is in our interests to get trading nations to case trading barriers, especially the non-tariff barriers which many of our industries claim are keeping their exports out of certain overseas countries, and surely GATT is the best mechanism for doing that.
As a major trading nation we must have regard to our international obligations especially the provisions of the GATT relating to import controls under Articles XII and XIX. The first of these

articles allows the use of quantitative restrictions to safeguard the balance of payments. It is intended to cover general measures to meet a balance of payments crisis, and we should need, if we adopted action under this article, to impose a general pattern of import controls, not merely controls over textile imports. We could not possibly invoke Article XII in justification of selective controls intended to protect employment in a particular industry.
The appropriate article for that purpose is Article XIX. That enables the imposition of temporary quantitative restrictions on a non-discriminatory basis—no one has argued that it should not be non-discriminatory—if increased quantities of imports are causing or threatening serious injury to domestic production. Obviously there would be difficulties and disadvantages in having recourse to Article XIX. The first problem facing our textile and clothing industries is not that stated in Article XIX. The condition that difficulty must be created by increased quantities of imports is not met.
A second serious disadvantage to having recourse to Article XIX is that it would undermine the Multi-Fibre Arrangement. If at the beginning of the life of this arrangement a country such as the United Kingdom, with a major stake in textiles, were to step outside the framework, others which had accepted its obligations would feel cheated and the balance of interests which it represents would be destroyed.
There would be retaliation. I do not share the optimism of many of my hon. Friends that there would not be. There has been retaliation from Turkey. There have been many examples of retaliation between one industrial country and another, not merely over textiles. The chicken war between the United States and the EEC a few years ago is an example.
General textile import controls would affect both developing and developed countries. If we restricted imports from developed countries they could retaliate and affect most seriously and adversely our export performance. It is with those countries where we have a favourable—

It being Twelve o'clock, the motion for the Adjournment of the House lapsed, without Question put.

CYPRUS

Ordered,
That a Select Committee be appointed to consider the situation in the Republic of Cyprus with particular reference to the current position of United Kingdom residents there

Ordered,
That the Committee do consist of Eight Members

Ordered,
That the Committee have power to send for persons, papers and records; to sit notwithstanding any Adjournment of the House; to adjourn from place to place; to report from time to time; and to report Minutes of Evidence from time to time.

Ordered,
That Two be the Quorum of the Committee.—[Mr. Walter Harrison.]

PARLIAMENTARY EXPENSES [LORDS]

Resolved,

That, with effect from 13th June 1975, so much of the Resolution relating to Parliamentary Remuneration and Expenses passed by this House on 18th December 1964 as relates to payments to Members of the House of Lords in respect of their expenses should not make any exception, as respects entitlement to recover such payments, for the Lord Chairman of Committees or Members of that House who are for the time being salaried under the Ministerial and Other Salaries Act 1975 and are not for the time being members of the Cabinet.—[Mr. Walter Harrison.]

PETITION

Footwear

Mr. Adam Butler: With your permission, Mr. Speaker and that of the House, I wish to present a petition. This is perhaps the most opportune moment to present a petition arising out of the very serious situation in the footwear industry, following, as it does, a debate which I believe has been an historic one in the footwear industry.
I should like to give the brief background to the petition before I read it to the House. It is the case that in two towns in my constituency, namely, Barwell and Earl Shilton, which draw their livelihood mainly from the footwear industry, since this time last year jobs have declined by 6 per cent. and, indeed, with one main employer the number of jobs has

declined since the beginning of this year by as much as 20 per cent.
The petition has been prepared in the space of only two days under the auspices of the two main unions in the industry. It has been possible to accumulate in that time a total of 1,641 signatures, headed by the Mayor of the Borough of Hinckley and Bosworth. The petition, which with your permission Mr. Speaker I shall read out, is brief and as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The humble petition of the people employed in the Shoe Industry in Barwell and Earl Shilton and the people resident in Barwell and Earl Shilton, in the Borough of Hinckley and Bosworth, in the Parliamentary Constituency of Bosworth, showeth that their livelihoods are greatly suffering because of the depressed state of the Footwear Industry, that the loss of jobs and reduction in earnings is affecting not only the workers in the Industry but the whole economy of the area, and that much of this situation is due to the importation of cheap shoes from foreign lands.
Wherefore your Petitioners pray that such measures may be taken to protect the livelihoods of persons employed in the Shoe Industry in Barwell and Earl Shilton and the citizens of Barwell and Earl Shilton and that in particular the import of boots and shoes shall be reduced to 60 million pairs per annum.
And your Petitioners as in duty bound will ever pray.
To lie upon the Table.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

HOUSING (LIVERPOOL)

12.4 a.m.

Mr. Eddie Loyden: I sympathise that hon. Members have been detained at this late hour and in the dying stages of this Parliamentary Session, but because of the importance of the issue that I want to raise tonight—namely, Liverpool's housing and rents position, I make no apology.
I, with other hon. Members on this side of the House, welcomed the action by the Government in making one of their first priorities on being returned to power the repeal of certain parts of the Housing Finance Act 1972. Only this week we have been dealing with some of the


residual problems carried in the wake of that Act. In my opinion, it created the greatest upheaval within local government and a great deal of resentment amongst tenants because of direct interference by the Government particularly in the regulation of rents. It was with some pride and satisfaction that I served as a Member on the Housing Rents and Subsidies Bill Committee—Standing Committee A—which dealt with the repeal of parts of the 1972 Act.
The main purpose of bringing this matter before the House is to point to what appears to be a major discrepancy in the intention and spirit of the Government regarding the Housing Rents and Subsidies Act, on the one hand, and the action, intention and interpretation by Liverpool City Council of that Act, on the other hand.
In Committee on the Housing Rents and Subsidies Bill I raised a question concerning a matter which had been brought to my attention at that time—namely, that the then controlling body on the Liverpool City Council had acted almost instantly, before the Bill had reached finality in Committee, and projected rent increases in Liverpool of £1 per week per dwelling. That was a matter of concern to myself and to other hon. Members at that time. Therefore, I raised with the then Under-Secretary of State for the Environment the question whether it would be in accord with the spirit and intention of the Bill to invoke increases in rents of the order of £1 per week per dwelling. As reported at col. 194 I said:
It has been said in Liverpool, with what sort of authority I do not as yet know, after some appraisal of the Bill's effects that rents next year could go up by £1 per week per dwelling. I do not know whether that was an authoritative statement. I do not know whether the analysis of the Bill was based on figures possibly not available at that time. Nevertheless, the chairman of the housing committee in the locality made that comment.
In reply, at col. 199, the Under-Secretary of State said:
There is no reason why rents in Liverpool should be increased by £1 a week. I am sure that the hon. Member for the Isle of Wight (Mr. Ross) will be in touch with his friends in Liverpool and will tell them that the best way for it not to be used as a political football is not to seek to put up rents by £1 a week.
My hon. Friend, in reply to me again, said that he considered that rents of that size would not be acceptable.

At col. 194, the Under-Secretary said:
We should have to consider very carefully the use of Clause 2 if a local authority of the size of Liverpool were to put rents up by £1 a week, taking into account the generous subsidies we are making available. There is no reason why average rents should rise anywhere near £1 a week under the subsidy arrangements under this Bill."—[Official Report, Standing Committee A, 5th December 1974; cc, 190–99.]
I refer to those points to clarify the position, because in spite of the fact that those figures given in December 1974 may have to be altered marginally because of the increase in the rate of inflation at that point, everyone agreed that there can be no justification for arguing that rents should be increased beyond what was considered at that time to be reasonable between 40p and 45p. At that point in time the considerations were on the basis that a 50p rent increase would be not considered reasonable.
We now have a situation in Liverpool where there has been a 100 per cent. increase. Those in local councils should act in accordance with the responsibility the Government have given to them for determining the level of rents. It may be argued that the rent increase of £1 is not a tremendous amount.
I want to draw the Minister's attention to the reply which I received today—a Written Answer to a Question about the rent increases in Liverpool. I was astounded to find that the Minister for Housing and Construction said:
I understand the average rent increase is £1 a week from 4th August 1975. Allowing for two rent-free weeks this represents about 60–65p a week spread over the current financial year.
Some time ago Liverpool adopted a system that instead of having rents spread over 52 weeks, rents were spread over 50 weeks. This benefited the city's housing department, because administration was made easier, and also, to some extent, the tenants. The effect of this action was not to have a rent-free two weeks, but that the rent was calculated on an annual basis and divided by 50 instead of by 52. Bearing in mind the reference in the answer that the two rent-free weeks mean that the average rent increase represents about 60p to 65p a week, this means that the £1 increase is reduced by 35p to 40p a week. As hon. Members will appreciate, this would be impossible under the rent


formula used by Liverpool, and the average figure would be nearer 96p.
However, that does not tell the whole story. The Liverpool City Council has not been even-handed in its approach to rents. We are not talking about a £1 a week increase. In some pre-war walk-up flats rents have risen by as much as £·86 per week.
These are massive increases in areas that have poor environmental qualities. This has been a deliberate act of retribution by the Liberal leadership on the Liverpool City Council on those areas that traditionally vote Labour. There is no doubt in my mind that the people of Liverpool are aware of this.
These are the people who spoke of openness and fairness in government but their intention has been to take the stick, literally, to the people of those areas in terms of rent increases. My main concern, however, does not rest on that point. I have other concerns about the rent revenue account in Liverpool and one is my concern about overspending. There is a lack of open government by the Liberal-controlled city council.
Before I came to this place I was a member of the housing committee in Liverpool, and I asked, on the question of overspending, for a special committee to be set up to investigate overspending. I have been here for 16 or 17 months and I understand that that committee has met once, and no attempt has been made to consider overspending. I am concerned about the cumulative effect on the housing revenue account which will have to be borne by the citizens of Liverpool in future.
There is a question about the facts of the arrears. It is apparent that the Liberal Party has been taking action against groups of tenants, and that this has had a serious effect on those tenants. One can imagine that if statements are made in the Press that tenants of certain blocks of flats are £x thousand in arrears, there is a mutual feeling among those who have commercial and business dealings with the tenants that they are bad payers.
This blanket statement is made without a proper examination of the rent arrears situation. The arrears position in the city council has to be seen to be

believed. I make one point from my own experience of this grave problem. In the Liverpool Echo of Wednesday 30th July there is an article headed "Cold facts of a computer create heated rents row". It says:
The row was spotlighted by Mr. George Curphey, of Kenley Close, Newsham Park, who said he found 'long queues of anxious, bewildered people' clutching eviction notices outside the Stanley Park Avenue North district housing offices.
He had gone to the offices after his invalid mother received a note asking for £ 38 arrears, and threatening her with eviction within 14 days if she did not pay".
That is the humanity and understanding of the problem of the mass of the people which is shown by the Liverpool Liberals. In addition, I received over the weekend a phone call from a man of 84. There are hundreds of cases in Liverpool where rent arrears notices are being sent to people who are not in arrears. Eviction notices are being sent to people who are not in arrears, and this old man of 84 was preparing—I do not over-dramatise things—to take his own life because he had received an eviction notice. He had the pictures of his family ready round the cooker. He is a man on his own.
I telephoned the housing department to find out the reason for such an eviction notice. They admitted the notice was sent in error. Those in control of the city have been saying that eviction notices must go out because there are rent arrears. I do not know what it is costing Liverpool council to send out the notices, but they are sent out without due regard to the age and situation of the people with whom they are dealing, or whether they are sick or elderly. The notice goes out and the consequences can be grave for people in those circumstances.
There is not enough time to go into all the details of the housing revenue account that disturb me greatly. But I ask my hon. Friend also to have a close investigation carried out into the effects of Liverpool's decision, during the operation of the 1972 Housing Finance Act, to pay into the housing revenue account not the amount that it received in real rent yields but the amount determined as a fair rent on the recommendations of the city council to the rent scrutiny board. I understand that it set up a separate account and placed in it the difference


between the rents being collected and the rents that would have been collected if the city council's recommendations had been put into effect.
The argument, which sounds common sense, was that if there were rebates to be paid to people who had been paying excess rents, the fund would provide the wherewithal to do that. But that may well have affected the subsidy position. I do not know whether it has had a direct influence upon the problems with the Liverpool housing revenue account.
A thorough inquiry into the Liverpool situation is necessary. If we are to pursue the Government's policies, which include tackling the problems of slum clearance in areas such as Liverpool, tackling the problem of 22,000 people waiting for accommodation, there must be a different approach to the housing revenue account and the other policies now being pursued.
The people concerned, who argue that they were acting in the interests of the whole community, are holding in reserve several millions of pounds so that they can maintain the rate levels next year. They are sacrificing the well-being of the citizens of Liverpool and blaming the Government for all their own actions. It is time the people were told that the Liberal Party in Liverpool is acting independently under the powers returned to it by this Government in relation to rents and housing.
I ask my hon. Friend to study the matter carefully and to investigate closely the affairs of the Liverpool housing revenue account.

11.23 p.m.

Mr. Robert Parry: I am grateful to my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) and the Minister for allowing me to intervene briefly. [Interruption.] We could not miss the hon. Member for Rochdale (Mr. Smith).

Mr. Deputy Speaker (Mr. George Thomas): Order. We might as well finish on a friendly note.

Mr. Parry: My hon. Friend has dealt adequately with the objections raised by the tenants in Liverpool to the recent Liverpool rent increases.
I wish to refer particularly to my constituency, where the Liberals have deliber-

ately, through political motivation, crucified the tenants with massive rent increases. At the last elections in Liverpool, the Liberals proudly boasted that theirs was the only local authority in the country to reduce rates by 1p, but they did not tell the people that they would increase rents by pounds—not just £2 or £3.
I wish also to refer to Early Day Motion No. 615 in my name, to which some corrections should be made. The figure of £4·64 per week for the highest rent increases, given in line 3, should be amended to £4·99. In line 7 I meant to include after "provide" the word "additional".
I received a letter from the city treasurer dated 26th July which reads:

"1. The total average rent increase is £1 per week.
2. The highest increase is £4·24 per week. There were, in fact, over a thousand dwellings which had a reduction in rent and the largest reduction was £2·33.
3. The average percentage increase over the whole housing stock was 26 per cent."
In my constituency the increases are between 70 per cent. and over 200 per cent. There has never been one reduction in my constituency.
Political motivation was involved. All along the Liverpool docklands from Dingle to Bootle no Liberal councillors were elected. They are lucky if they can attract even 100 votes. In the election last February the Liberal candidate in my constituency attracted the lowest Liberal vote in the United Kingdom. In October that vote was reduced by one half.
This buffoon, the hon. Member for Rochdale, often interrupts the debate. I challenge him to live in my constituency for one week. I suggest that he would not last for one day.
Last week, the Liberal leader of the city council was escorted by six policemen following a special meeting of the housing committee. We would need two dray horses and a big cart for the hon. Gentleman.

Mr. Deputy Speaker: I did not wish to interrupt the hon. Member. However, for the sake of the record, I must say that the term "buffoon" as applied to an hon. Member is an unparliamentary expression.

12.27 a.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): I am grateful to my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) and my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry) for raising the important and sensitive issue of rent increases for the nearly 74,000 tenants of the Liverpool City Council. Clearly the Government is most concerned at the impact of rent increases on household budgets.
When we took office some 18 months ago, local authorities had had their traditional right to fix their own rents stripped off them and given to non-elected, and non-appealable bodies. At the same time authorities were put under a duty to increase rents each year by 50p a week as rents remorselessly progressed ever upwards chasing the chimera of "fair rents". We had to deal with that policy. I want to remind the House of our efforts made in a national context to deal with this very severe impact on household budgets.
The Government's policy nationally on council rents has been first of all to return the right to fix reasonable rents to the local authorities, where we believe that it rightly belongs. Only they can best decide how to apportion any rent increases in the fairest way because of their intimate knowledge of the state and location of their properties. Secondly we have provided additional subsidies from the Exchequer to limit rent increases both this year and next. And thirdly we have updated the rent rebate schemes already once this year and are doing so again in November.
Now, let us look at the situation in Liverpool to which my hon. Friend referred. We have been reminded of some alarming increases, which on the face of it seem unreasonable. But first we must try to assess the overall position before deciding whether a local authority is acting unreasonably. The average increase in Liverpool is £1 a week from last Monday, 4th August—the first increase since October 1973. This increase when spread over the current financial year and taking account of the two rent-free weeks averages about 60p to 65p a week. The majority of the rent increases in the rest of the country this year fall in the band of 50p to 80p a week. In Liverpool

I understand that 55 per cent. of the tenants have increases of £1 a week or less, which means that 45 per cent. are in the other category.
A great deal has been said about the so-called nest-egg, but I assure my hon. Friends that Liverpool has been treated in exactly the same way as any other authority in the allocation of housing subsidies.
I also understand the deep concern of individual tenants whose rent increases are very much higher than the average. Here, I would make two points. First, as I have said, we consider that locally-elected bodies rather than distant Whitehall are far better able to decide how to apportion a rent increase. They know exactly the state of repair or degree of modernisation of their dwellings. Moreover, they are answerable to the local electorate for their decisions. Fairness between individual properties can best be determined and decided locally.
Secondly, I am informed that Liverpool has based its recent rent increases on a common multiplier of the gross values of their dwellings. They therefore take into account the locality and quality of dwellings, and are independently assessed by the Inland Revenue. Both local authorities and their tenants have the right to object to the assessment of the gross values of their dwellings. So gross values can give a broad indication of the rental differentials between dwellings.
I am also told that there are tenants, particularly in the city centre, who have had no rent increase for three to four years, and inevitably for them the rent increases have been steeper than for others. But if there are cases of hardship, I trust that the rent rebate scheme will provide adequate help.
Our attitude to the fixing of local authority rents is very clear, as was revealed by our opposition to the Housing Finance Act. We were able this year to honour the commitment in our manifesto to return to local authorities the right to fix their rents. We are naturally very reluctant to interfere with this recently restored freedom.
I do not regard it as a central government responsibility to scrutinise how local authorities decide to apportion a reasonable average rent increase over their dwellings. They should know far better


than I what is the local situation, and they must be allowed to take such decisions, and be responsible for them to their own local electorate.
I assure my hon. Friends that I shall read carefully what they have said. They will be interested to know that next Tuesday, 12th August, representatives of the Liverpool Council will be meeting

officials of my Department to discuss this problem. I shall see to it that we have a thorough exchange of views on all the points that have been raised in this important debate.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to One o'clock.